Home Loan

Obtaining a home loan is as easy as pie for one while other may have to struggle a bit to get the same. With the aspiration of buying a home, one diligently explores various options available in real estate within budgets. What’s next after you have finalized your dream home? Obtaining a home loan is, surely, a crucial step to realize your dream of own house. How to obtain a home loan? Following are the steps one need to follow to obtain a home loan for your dream home.

Initial Evaluation of Property: You need to submit a loan application with its processing fee as the first step of loan application. The bank will evaluate your credibility basis your credit history and documents provided by you.

Verification by the Bank: After qualifying the eligibility criteria, you need to submit your documents which shall get processed by the bank. To cross check your details provided in documents, a bank representative will visit your work place and residence as well.

Evaluation shall be done for the property to be purchased. However, in case your loan application gets rejected, your processing fees shall also get forfeited. Hence ,it is highly recommended to go through the guideline for application while applying for home loan for your home.

Documents Required: Following documents are required to obtain a home loan once your application gets approved –

Loan Application
1. 3 Photographs of the Applicant
2. Identity Proof – Passport, Aadhar Card, PAN card or Driving License.
3. Address Proof – Electricity Bill, Aadhar Car, Driving License
4. Proof of Income-
For salaried employees, Last three years copy of income tax returns and original salary slips.
In Case of self-employed; proof of business existence, Profit and Loss statement & Balance sheet for last 3 years certified by a CA, Income tax return of last 3 years and photocopies of challans for Advance Tax payments
5. Passbook and Bank Statement for the period of last 6 months
6. CIBIL score of the applicant.
After submitting these documents, you will get the acknowledgement letter from the Bank.

Acquiring Pre-Approval of Loan
With acquiring the pre-approval of loan, you have to obtain the loan within 3 to 6 months will now be definite about your buying capacity and can negotiate better with the seller. In case the project is not approved the bank and the time taken by bank to approve a project exceeds the pre-saction loan limit, your loan may get cancelled. To avoid such situation, always go for an approved project in case of applying for pre-approval.

Defining Credit History
Credit history plays a vital role in determining if you are eligible for loan or not. Credit Card dues and your existing debt against the EMIs you pay determine your Credit History. Ensure to not to make more of loan enquiries as it may pull down your creditworthiness.

Which Type of Loan to Choose From?
Hidden charges like valuation fee, processing fee etc. inflate the cost of your loan. So, compare while choosing a loan on basis of Hidden charges associated with it. Terms of repayment and rate of interest should also be considered as compared.

Clauses to be Considered in Loan offer Letter:
Once your loan is approved, you will receive a Loan offer letter from Bank comprising following clauses:
• Terms and Conditions of Loan
• Scheme or offers applicable, if any
• Interest rate – Floating/fixed/Mixed
• Tenure of Loan
• Mode of repayment
• Change in rate of interest over the period of time – if any
• Number of installments in which bank will disburse the loan amount

Assessing EMIs
Equated Monthly Installments (EMI) is the amount that includes the principal amount and interest to be repaid by the borrowers to bank. The amount of EMI is inversely proportional to the duration of EMI. It is calculated by using a factor called Fixed Obligation to Income Ratio (FOIR) which is generally 50% to 60 % of the net salary of the borrower.

Other factors like Interest Rate (Fixed or Floating or semi-fixed) shall also be considered while obtaining a loan.