The home loan process can be a tedious effort unless you are aware of what steps to follow for smooth processing of home loans. Because the lending banks need to rely on you for repayment, they would sanction your home loan only if they find you as an eligible candidate and are not a defaulter in any case. Additionally, home loan disbursement is part of the entire process that follows a phase-wise pattern. In a nutshell, having an overall understanding of the home loan process beforehand is worth when you are planning to buy a house.
Home loan sanction process – The first thing in a home loan process is that bank sanctions your home loan based on the following criteria:
You have submitted your home loan application with all relevant documentation and information as specified by the bank.
All the documents and information are valid and correctly mentioned and you undertake the responsibility that the information and documents provided are authentic.
Based on the information you provide, the bank verifies your residential address, your credit scores, your employer’s credentials and other details about you as may be desired by the bank.
After the bank is satisfied with all information about you, it sanctions the home loan by sending a loan sanction address to you at your correspondence address. The sanction letter usually outlines the loan amount, the tenure of repayment, the interest rate, the terms and conditions, and other details.
After you receive the same, you must duly sign the sanction letter if you agree with the terms and details mentioned therein and return a copy of the same to your financing bank for their records.
Home loan disbursement process – Sanction of the home loan does not really mean you have the loan handy in your account. This is a stage where some legal steps are followed to ensure that the sanctioned loan is judiciously utilized.
After your bank receives the signed sanction letter, you will be asked to submit the property related documents such as property sale deed, no objection certification, receipts towards your fund contribution and others.· These documents are then verified by an expert lawyer to understand the authenticity of the property information and reports back to your financing bank.
Based on the lawyer’s input, your bank then decides the loan date and the first down payment that you need to pay.· Although you would have submitted all of these documents, the bank also asks you for the Credit Facility Application Form and other associated document so that the sanctioned loan amount can be disbursed.
If your financing bank finds all of your documents and background verification reports satisfactory and convincing, it finally sanctions your loan for disbursement.
The loan amount is usually disbursed to you in regular installments based on your home type. Typically for a building under construction, the loan cash flows in a phased manner. However, if you are taking loan to buy an existing home fully built, you may be entitled to get the entire loan amount in one go. Note that your easy monthly installments (EMI) most likely starts only after your bank has released the entire loan amount that you have been sanctioned for.