The home loan sanctioning and disbursement process involves various steps. Read on to know more about the steps involved in getting your loan approved and getting the funds.
Today, with the financial institutions in India offering online services, applying for a loan has become much easier than ever before. But, still, you must be meticulous in complying with the processes involved until you get the amount credited in your bank account.
The home loan process involved three important steps, which are:
- Application
- Sanction
- Disbursal
Home loan application
The home loan application process starts with comparing the offers from different lenders based on the current home loan interest rates and other terms and conditions. Once you zero down on the lender, the next step is submitting an application form along with the necessary KYC (know your customer) documents. The application must be duly signed and the details mentioned therein must be accurate.
Home loan sanction
Once you submit the application, the lender then evaluates the details mentioned, including the documents’ authenticity. The sanction process can be completed faster if you provide all the necessary documents and genuine papers. Some of the critical factors that directly influence the sanction process and the amount applied include:
- Age of the applicant
- Income
- Qualification
- Profession
- Stability of job or business
- Repayment capacity
- CIBIL score
Additionally, your current dues (if any) or if you have taken any loan before applying for the home are reflected in the credit history, which affects your home loan sanction. While applying for a home loan, you must understand and be aware that the sanctioned amount can sometimes be lower than the amount you apply for, and it is solely at the lender’s discretion.
After the lender sanctions the loan, you will get a confirmation letter. The letter has a validity of six months, and it serves as proof that you are eligible to avail of a home loan. You can continue with the loan process within six months.
Home loan disbursement
After you receive the confirmation letter, which includes details of the loan amount you can borrow, the interest rate applicable, and the loan tenure, you must sign the same to give your approval for the same, and the loan’s disbursement starts. The disbursement stage involves three important steps.
First, the lenders will ask you to submit property-related documents for verifying the authenticity of the property and the builder. Typically, the lenders ask for the blueprint of the building plan approved by the local authorities, NOC (no-object certificates) obtained from the civic authorities, sales deed, agreement paper signed with the lender, etc.
Second, after you furnish the documents, the lender will appoint a legal team to verify the papers’ authenticity. Once the property is found to be clear of the title, the legal department will submit a report to proceed with the loan. In some cases, the lender may ask you to submit a few additional documents before disbursing the loan.
While the lenders evaluate the authenticity of the property-related documents, they also conduct a physical inspection of the property. They do a thorough technical evaluation to determine the exact value of the property.
Lastly, after the lender completes the property’s physical and technical inspection, the amount is disbursed in a single instalment or full amount as per the agreed terms and conditions mentioned in the loan documents.
As soon as the amount is credited in your account, the repayment period starts. You must repay the EMI on a specific date of the month consistently throughout the loan term to avoid default. Missing even a single payment or delaying it can have a significant impact on your credit score.
