Getting a Home Loan— the First step to Building Your Dream Home

For aspiring homeowners, buying a home loan is vital to meet all the necessary expenses involved in buying a house. As a home loan involves a large sum of money, the loan improvement process is difficult as it requires a lot of scrutiny and verifications. Buying a home loan is a daring and big step as it leads to anxiety, frustration, and fear along with a sense of accomplishment that you are going to own your dream home. 

There are also certain risks involved and if you are not fully aware of the home loan process, it will cause stress. With the zooming property rates, it is not possible to buy a home by spending your savings fully. A home loan is a safe and secured loan that leads you to buy the property of your choice in a hassle-free manner. A home loan offers high-value funding at economical housing interest rates which are paid through EMIs. 

After the loan repayment, the property is transferred to the borrower.  There are different types of home loans including home purchase loans, home improvement loans, home construction loans, land purchase and home extensions loans, joint home loans, home loan balance transfers and top-up home loans. However, before buying a home loan you must provide all the necessary information carefully as a single mistake can lead to rejection which can affect the borrowers’ credit score.

Step-by-step Guide to taking a Home Loan

In this blog, we have tried to cover all the detailed information, and steps about the Home Loan process which will help you immensely to get your home loan approved easily. The home loan process includes the following steps; 

1. Application Form: First, you need to fill up the application form and need to attach the required documents. The process of home loan starts with filling out the application form where you will have to provide all the personal details.
2. Verification of Documents: After you submit the documents the bank verifies the documents provided by you which may take 2 days and during this, you will be asked to appear in the bank for the face-to-face interview.
3. Background check: Bank verifies the document and conducts an investigation based on the data given by you in the form including residential addresses, office and contact details etc.
4. Pay Processing Fee: Your bank will process non-refundable processing fees which most banks are 0.5 to 1% of the loan amount processing fees. A credit score above 750 is considered a good signal as there are chances for getting the loan approved.
5. Assessing the repayment capacity: The borrower’s repayment capacity will be verified. The bank may sanction or deny the home loan by judging your ability to repay the principal with interest in a timely manner.
6. Processing the property:  After you receive the sanction letter from the Bank you need to submit the property documents to the bank which will remain under the bank’s custody till the loan repayment.
7. Loan disbursement: The final step is the disbursement of the loan after the terms and conditions are accepted by the borrower and the documents are signed. 

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Read: Indian Bank Home Loan EMI Calculator

How to Apply for a Home Loan?

Applying for a home loan needs a lot of rough work before you actually get into the process. Getting a house loan depends upon a couple of factors including your repayment capacity, stable source of income, proper documents etc.  

There are a number of government and private banks that offer housing loans and the interest rates vary from each other. You can check the interest rates offered by various banks here.

The Interest Rate of Different Banks

Housing loan interest rates vary from bank to bank. Some banks offer the lowest home loan interest rate.  Below mentioned are home loan interest rates provided by various banks;
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Sr. No	Banks	Starting Interest Rates Per Annum
1	Kotak Mahindra Bank:	7.50%
2	Citi Bank:	6.65%
3	Union Bank:	8.25%
4	SBI Home loan interest rate:	8.55%
5	HDFC Home Loans:	8.60%
6	LIC Housing Finance:	7.55%
7	Axis Bank Home loan interest rate:	7.60%
8	Bank of Baroda:	7.45%
9	Central Bank of India:	7.20%
10	Bank of India:	7.30%
11	Canara Bank:	8.10%
12	UCO Bank:	7.40%
13	Punjab National Bank:	7.40%
14	IDBI Bank:	7.60%
15	DBS Bank:	7.30%
16	IDFC First Bank:	7.50%
17	YES Bank:	8.95%
18	IIFL home loan interest rate:	8.20%
19	ICICI home loan interest rate:	8.40%
20	Shriram Housing:	8. 90%

It is always important to choose the right bank and identify the right financial institution which has a good reputation, the bank which takes less time to process and disburse a home loan etc. You can choose the bank with the lowest interest rates. 

You must decide the interest rate to either be a fixed rate of interest or a floating rate of interest. You too can choose the bank which is providing the lowest processing fee and gives good customer service. The banks like State Bank of India, Punjab National Bank, Central Bank of India, HDFC Bank, Axis Bank and ICICI Banks and all others banks are offering housing loans. 

Once you select the right bank you can proceed further with the application process by filling in the required details including your name, address, telephone number, education, occupation, source of income, monthly and annual income etc. along with the property details, estimated cost and affordable deposits. 

Along with that, you need to furnish all the documents like address proofs, income proof, income certificate, Income Tax Returns for the last 3 years etc. with the application form.
Read: What is a Home Loan Balance Transfer & How to Transfer a Home Loan?

Documents Required for Applying for a Home Loan

While filling up the loan application form you need to attach the required documents. The process of a home loan starts with filling out the application form where you will have to provide the below mentioned personal details and some documents required for home loan processing.

The Personal Details of the Applicant:

• Name and age
• The residential address of the applicant 
• Monthly or yearly income
• Education information
• Employment details
• Property details 
• The estimated cost of the property 
• The present means of financing

Documents Required to Apply for a Home Loan

• Identity proof, Address Proof, Age proof (like Aadhar Card, PAN Card, Electricity Bill, Gas Bill, Landline Bill, 
• Education proof (school/diploma/degree certificate etc)
• Passport size photographs
• Employment details and Income proof
• Bank statements
• Property details
• Personal Assets Information along with all the necessary liability statements of the applicant.
• Salary certificate 
• Form 16/IT Returns for at least the past 2-3 financial years for salaried individuals
• IT Returns/ Assessment order copies of the last 3 years for self-employed professionals and entrepreneurs
• Challans as advanced proof of income tax payment for self-employed professionals

List Of Documents Required by NRI Applicants

• KYC establishing documents 
• Current Salary certificate
• Lat 3 to 6 months’ salary slip
• Latest IT Return 
• Business licences, sponsorship agreements, powers of attorney, etc., required for self-employed business
• Passport Photocopy
• Government-issued employment documentation from the nation in which you are resident, such as a work visa, a labour contract, etc.
• Property-related paperwork from an Indian architect or engineer that includes a price estimate
• If there is no proof of wage credit to India, the employee’s income records must be confirmed by the authorities of the employee’s place of residence.
• You must provide six months of bank statement copies from any overseas income.
• NRO/NRE statements from the issuance bank over the last 6 months.
• If the individual is currently unavailable to sign the instrument, Power of Attorney has to be presented by the person who represents them.

KYC Documents

• Photo Id Proof: Passport or PAN Card or Driving License or Voter ID Card (Anyone)
• Residential proof: Electricity Bill under the name of the applicant, Ration card, Telephone Bill, Employment Letter, Passbook or bank statement with address (Anyone)
• Age Proof Documents: PAN Card, birth certificate, passport, driving licence, bank-issued passbook, 10th class mark sheet (Anyone)

Documents List for Loan Guarantor

• Liability statement and assets detail
• Proof of Residence 
• Identity proof
• Business Premises Proof
• Signature ID from the current banking institution
• Passport size photo

List Of All Property Documents

You must have the property documents such as —
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A sales agreement, sales deed,possession certificate, allotment letter, NOC from the builder or the housing society, land tax receipt from the Revenue/ Land/Land Revenue department and occupancy certificate for a fully constructed property are required.

Home Loan Eligibility

Housing loan eligibility criteria have common parameters across all banks and non-banking financial companies.  Age between 18-70 years, income Rs.25000, a credit score above 750, the person can be salaried on non-salaried, a permanent resident or NRI, LTV Ratio up to 90%, the property can be under construction, or completed, land, plot, build on own land or buy land and build home etc. are minimum criteria considered for home loan eligibility. 

However, the applicant can check the home loan eligibility by visiting the websites of preferred lending banks. Usually, there are a set of parameters based on which the banks assess the borrowers’ creditworthiness which includes age, credit score, monthly salary, CIBIL Score, financial obligations and financial status etc. If you can try to get your parents or spouse as co-borrower it can raise the chances of getting your application approved. If you pay a higher down payment and the less you borrow, the less money you need to pay back and it may get you a lower interest rate. Always pay attention to your errors on the credit card, and be prompt in responding to your lender which can enhance your eligibility for a home loan. However, a mortgage loan in India is a secured process. 

Age Restriction for Home Loan Application

As long as the applicant is 18 years or older, age is not a barrier if the applicant has a monthly stable source of income, salary or social security. However, most of the banks consider the age between 18-70 years. Age is another factor that determines your loan tenure. If you are of lower age you will be able to avail of longer repayment tenure. A home loan minimum tenure is 20 years and maximum tenure of 30 years. 

Income of Different Slabs

One of the eligibility criteria that determine how much loan you can avail is your in-hand or take-home salary deducting gratuity, PF, ESI etc. For example, if you take Rs. 25,000 in hand salary, you can avail of 18.64 lakh as a loan to purchase a home worth 40 lakh, if your take-home salary is Rs. 50,000 you can avail of a loan amount of Rs. 37.28 lakh for the same property. If your take home is Rs.75,000, you can get Rs.55.93 lakh. One of the important factors is that you should have a stable income and your EMI should be 40% to 45% of your salary or income.

 Waiting Time and Charges for Home Loan

The loan processing time can vary between the lenders. However, if everything is in order, and all the documents and information provided are correct you can expect a reputed loan provider to process your application within 1-2 weeks. But, it can take longer in some cases. A loan processing charge varies from Bank to Bank and typically costs about 0.5% to 2.50% of the total amount of the loan as the bank has to bear some administrative costs while processing your loan. The home loan approval process time may vary from bank to bank.

How can NoBroker help?

NoBroker has simplified your home loan process by providing all the relevant information pertaining to home loan eligibility criteria through its step-by-step guide. We provide all the necessary A to Z information pertaining to home loans which will help the applicants immensely to go for hassle-free home loan processing. 

Reach out to NoBroker service to clarify your Home Loan-related queries instantly.

The home loan process needs a lot of consideration as it involves a large sum of money. However, a simple mistake can result in application rejection. So, always be careful, pay attention to your application form and documents, pay attention to the mistakes, and always be responsive to your lender. NoBroker has made it all easier through its step-to-step guide. You can get all the home loan information from this blog.

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