Applying for a home loan is one of the best ways to get the desired funds for buying a new home. Today, many lenders in India, including public and private banks, housing finance companies and non-banking financial companies offer a wide variety of home loans at affordable interest rates. 

Most of the reputed lenders also offer customised home loan solutions to suit the specific financial requirements of the borrower. By getting a home loan India, you can keep your hard-earned savings intact and repay the amount in smaller instalments over a period.

However, it also means that you take a huge financial responsibility and commit to repaying the EMIs throughout the loan tenure, which can last for a few decades. If you are applying for a housing loan, you may feel overwhelmed with the whole process and wonder how home loan works. 

So, to help you get the answers you are looking for, in the article, we discuss how home loans work in India. 

The first step in getting a home loan is to compare the loan offers from different lenders and zeroing down on the lender. When you compare, you must pay close attention to the home loan interest rate, home loan process, time taken to disburse the amount, documents required, other charges involved, etc.

Submit your application form along with the relevant KYC (Know Your Customer Documents). Make sure that you fill all the details in the form, including your employment history, education, income details, etc. Although the KYC documents required may vary from one lender to another, most financial institutions would require you to submit following documents:

•     Proof of identity and residence
•     Passport size photograph
•     Bank account statement for last six months reflecting your income

After you submit the form, the lender may ask you to pay the processing fees. If you are applying for the loan online, you can pay the fees online through debit/credit card, bank transfer or through UPI. If you apply for a home loan offline, you can issue a cheque. The processing fees are usually 0.50% of the home loan you want to borrow. In some cases, the lender may set a fixed amount. 

If you have already short-listed the property you want to buy, you must also submit the property-related documents to the lender for verification.

After you comply with the application process, the lender will start reviewing your application. They will verify each and every detail you mentioned in the application form, including income, credit score, employment history, etc. And based on their assessment of your profile, they will send you a sanction letter. 

The letter will contain details of the maximum amount you can borrow, the interest rate, the type of interest rate charged, and other loan terms and conditions. Make sure that you carefully read the loan terms and if you are satisfied, you must send a signed copy of the same stating your approval within a specific period. 

Once you accept the offer, the lender will then verify the property-related documents and conduct a physical inspection of the property to ensure that the property has a clear title and the builder is not involved in any legal case. 

If the documents are clear, the lender will ask you to pay the down payment and draft a final loan document outlining the terms and conditions in detail. Once you sign the papers, the lender will disburse the full amount in a single instalment to the builder or the seller. 

Final word

Getting a home loan in India is not as hard as it may seem. However, it is vital that you know the processes involved. This will help you be on top of the application process and you can make informed borrowing decisions.