A Step by Step Guide to Availing a Housing Loan

The home loan market in India has recovered well following the global health crisis and subsequent economic slowdown. The RBI’s decision to lower the policy rates have played a notable part in this development. It allowed financial institutions to lower the applicable interest rate on housing loans, which further prompted investment in this sector.

Therefore, individuals who are planning to go ahead to apply for this credit instrument should get a fair idea about its application process to avoid any delays.

What is the step-wise guide to apply for a housing loan?

Take a look at the following housing loan process listed below:

Step 1: Fill in the application form

Fill in the name, contact details, residential pin code, and employment status etc. After submitting this application form, a representative will contact the applicant to guide him for the following procedure.

Step 2:  Submit the necessary documents

Selected lenders also provide a doorstep facility where representatives visit an applicant’s registered address to receive documents. Submit relevant documents to confirm details mentioned in an application form:

• KYC documents such as Aadhaar card, passport, etc.

• Residential proof such as current utility bills like electricity bills or any identity proof

• Income proof that varies with each applicant. For example, salaried individuals need to submit their current salary slips of Form 16. Self-employed applicants need to submit their bank account statements for the last 6 months. Other financial documents include their business balance sheet and profit and loss statement.

• In the case of self-employed applicants, submit documents such as GST registration certificate, trade licence, partnership deed etc., to validate their business operation.

• Documents of the property such as allotment letter, NOC, property title deed, etc.

• Recent passport-sized photographs

Lenders may ask for additional documents; hence, it is ideal to check the same with a financier before applying for a housing loan.

Step 3: Document verification

Once submitted, a financial institution will verify the details entered in an application form with supporting documents. It may contact the applicant’s office to verify his employment status. Additionally, a financier performs a credit enquiry to check the credit score, and repayment track record of an individual.

Step 4: Sanction letter and payment

After confirming details, the lender will issue a sanction letter summarising the loan amount, housing loan interest rate, tenor, terms and conditions, etc. Individuals need to sign to accept this sanction letter and submit it to the lender. After that, pay the one-time secure fees. A lender may demand this payment at the initial stage of this application process. 

Step 5: Legal and technical checks 

Most lenders send their representatives to the property site for legal and technical inspection. After conducting all the checks, applicants will receive an agreement letter. Accordingly, the financial institution will disburse the loan amount according to the specified terms.

Home loan application is a lengthy process and take weeks to complete. However, leading financiers extend pre-approved offers that streamline this process and save time. Such offers are only limited to existing customers and on financial products like home loans, LAPs, etc. Individuals can check their pre-approved offers by submitting their contact information.

Besides knowing the application process, one should also learn about the eligibility parameters of housing credit to avoid rejection.

What are the eligibility criteria to apply for a home loan?

Before applying for a home loan, applicants must check the following eligibility criteria:

Salaried applicants 

• Age limit: 23-62 years

• Minimum work experience: 3 years

• Minimum salary: Rs.25,000

Self-employed applicants

• Age limit: 25-70

• Business vintage: 5 years

Other common criteria are –

• CIBIL score: 750 and above

Remember, the loan amount differs with an applicant’s age, income, employment status etc. Besides, as a borrower, you can also use a housing loan EMI calculator online to compute monthly instalments in advance. Hence, you can reap the benefits of calculating EMIs before applying for a loan. 

You can also reduce your home EMIs with a balance transfer to reduce the payable monthly instalments. Keep an eye on financial institutions’ interest rates to make an informed decision before availing of housing loan balance transfer.

Housing loans are one of the preferred credit options for borrowers when purchasing a property. Hence, keep the loan application procedures mentioned above in mind and check the eligibility criteria before applying for the same. Along with that, go through the loan terms and conditions before applying to make an informed decision.