Buying a home will always remain one of the most important decisions of anyone’s life, whenever they plan to do so. Therefore, taking that decision in haste can be worrisome in the long run, whether it is the choice of the property or how one is planning to purchase it. With property rates skyrocketing, most people today are understandably depending on home loans to realize this dream of theirs. However, this may be tricky if one is not paying close attention to details with regard to choosing the right lender and the right loan. Thus many financial experts advise that anyone who is planning to apply for a home loan should be ready to first immerse themselves in researching and finding the right lender and then understanding the lender’s complete home loan disbursement process.
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The process of loan approval and disbursement involves a number of stages, starting from the application part to finally, the lender handing over the loan amount through bank transfer, demand draft, or cheque. Therefore, it is essential to familiarize oneself with each and every aspect of this process so that the loan disbursal happens in a smooth manner, and there are no hiccups along the way.
Application and Sanction – the two stages before the loan disbursement process begins.
The first stage is filling up the loan application form and submitting it along with other KYC and requisite documents, as sought by the lender for verification. It may be noted that apart from the application form and KYC document, other required documents asked can vary from lender to lender but usually it is the same in most cases including bank statements, proof of income, income tax returns, sale agreement, property documents, credit score, etc. The completeness and correctness of the documents are crucial for a favorable outcome. Therefore, it is necessary for borrowers to fill up the application form accurately and also provide all the required documents in a proper sequence and in good, legible condition so that the initial verification part is smooth sailing!
Suggested read: Housing loan in India
In this stage, the lender screens the loan application, verifies documents and ascertains the repayment capacity of the borrower based on his or her occupation, annual income, credit score, house property in question and more. This is a crucial stage for the lender and thus, it involves legal and technical evaluation teams, based on whose recommendation approval for loans are sanctioned.
In the last decade or so, courtesy the digitization of all processes, completion of these two stages has become quite quick, convenient and hassle free. Therefore, lenders today are able to quickly sanction the loan after getting a green signal from their technical and legal teams. Once the sanction letter is received, the borrower needs to comply with the remaining process requirements before the loan can be actually disbursed.
There are usually three main stages of home loan disbursement.
Once the borrowers receive the sanction letter, they are required to place a request with the lender to initiate the disbursal process. Meanwhile, they also need to arrange certain documents for submission, if not submitted earlier like sale agreement, property ownership, house allotment letter, payment receipt, etc.
There could be two scenarios in this case, one being an under-construction property and the other being a ready/resale property.
Suggested read: Home Loan Eligibility
In this case, the documents that the borrowers need to produce are the house/flat allotment letter, demand letter, payment receipt, post-dated cheques, etc. This is done to further authenticate one’s claim for the house loan.
In case of a resale or ready-to-move property, one is required to submit the sale agreement, along with the other chain of property documents.
Once the requisite documents are submitted, the financial institution or the lender this time conducts a technical and legal evaluation of the property for which the loan has been sought. After a satisfactory evaluation of all the documents, the requisite signature of all parties, and the payment of the loan processing and other fees, the final decision for sanctioning of the disbursal of the loan amount is made by the lender.
Once the decision is in favor of the loan seeker, the lender releases the sanctioned loan amount. This is the final loan disbursement stage. However, it is to be kept in mind that the loan amount that may be disbursed, either can be in full or partial. This depends upon whether the property is under construction and is at what stage of construction or is simply ready to move.
In case, the total loan disbursement is made by the lender, then in that case, the EMI payments begin from the next month from receivable of the loan amount. On the other hand, if it is a case of a partial loan, one has to start paying the pre-EMI interests till the time the entire amount is disbursed.
So whether one is applying for an HDFC home loan or an SBI loan for purchasing a house, they have to be quite meticulous in their approach from the beginning – right from comparing various banks and financial institutions for their offered housing loan interest rates, eligibility, and other important aspects and zeroing down on one to filling up the loan application form, submitting authentic documents and paying all the requisite fees on time.
The entire thing can be a bit overwhelming for some but the trick is to be aware of the entire home loan disbursement process and be smart enough to fulfill all the requirements of the lenders with diligence and on time. Thus, thorough research becomes quite necessary on the part of the loan seekers before applying for a house loan and getting a favorable result. In the end, a bit of stress and a bit of anxiety is still bearable, when the question is of owning one’s own house – an asset for life and generations!
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