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The process to get a home loan in India involves several steps, which before digitization of banking were complex and time-consuming for applicants. Today, online house loan procedure is not only easy but also quick. Your loan can be disbursed in just a few days. If you aren’t aware of the steps involved in the home loan process, read below:
Step By Step Process of Getting Home Loan
Step 1: Loan Application
The procedure to avail home loan starts with filling out the application form and submitting all required documents such as KYC documents, proof of income, property related documents (if identified), etc. Co-applicant(s) (if any) will also be required to sign the application form and furnish the same set of documents.
Click to view:- The complete list of documents required to apply for a home loan
With the digitization of banking services, many banks and HFCs have started offering online facility to apply for home loans. Such online application processes have also helped lenders to offer ‘instant,’ ‘pre-approved’ home loans and make the loan process quicker and more seamless. The advent of online financial marketplaces like Paisabazaar.com has further eased the home loan comparison and application process. Prospective home loan borrowers can visit these online financial marketplaces to compare the home loan features offered by multiple banks and HFCs/NBFCs and then apply for the one that best suits their home financing requirements.
Note: Home loan interest rate, tenure and LTV ratio may vary widely, depending on the lender and their credit assessment of the loan applicant. Therefore, one must always compare home loan interest rates from various lenders before applying for a home loan.
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| Name of Lender | Up to Rs. 30 Lakh | Above Rs. 30 Lakh to Rs. 75 Lakh | Above Rs. 75 Lakh | |
| SBI | 8.50%-9.85% p.a. | 8.50%-9.85% p.a. | 8.50%-9.85% p.a. | Check Eligibility |
| HDFC Bank Limited | 8.75% p.a. onwards | 8.75% p.a. onwards | 8.75% p.a. onwards | Check Eligibility |
| LIC Housing Finance | 8.50% - 11.25% p.a. | 8.50% - 10.55% p.a. | 8.50% - 10.75% p.a. | Check Eligibility |
| ICICI Bank | 8.75% p.a. onwards | 8.75% p.a. onwards | 8.75% p.a. onwards | Check Eligibility |
| Kotak Mahindra Bank | 8.75% p.a. onwards | 8.75% p.a. onwards | 8.75% p.a. onwards | Check Eligibility |
| PNB Housing Finance | 8.50% - 14.50% p.a. | 8.50% - 14.50% p.a. | 8.50%-11.45% p.a. | Check Eligibility |
| Punjab National Bank | 8.45% - 10.25% p.a. | 8.40% - 10.15% p.a. | 8.40% - 10.15% p.a. | Check Eligibility |
| Bank of Baroda | 8.40% - 10.65% p.a. | 8.40% - 10.65% p.a. | 8.40% - 10.90% p.a. | Check Eligibility |
| IDFC First Bank | 8.85% p.a. onwards | 8.85% p.a. onwards | 8.85% p.a. onwards | Check Eligibility |
| L&T Finance Limited | 8.65% p.a. onwards | 8.65% p.a. onwards | 8.65% p.a. onwards | Check Eligibility |
| Tata Capital Housing Finance | 8.75% p.a. onwards | 8.75% p.a. onwards | 8.75% p.a. onwards | Check Eligibility |
| Federal Bank | 8.80% p.a. onwards | 8.80% p.a. onwards | 8.80% p.a. onwards | Check Eligibility |
| Axis Bank | 8.75%-13.30% p.a. | 8.75%-13.30% p.a. | 8.75%-9.65% p.a. | Check Eligibility |
| Godrej Housing Finance | 8.55% p.a. onwards | 8.55% p.a. onwards | 8.55% p.a. onwards | Check Eligibility |
Note: Interest rates as of 13 December 2024
Step 2: Credit Appraisal
After receiving the home loan application along with the required set of documents, the lender begins the credit appraisal process. In this step, the lender evaluates the applicant’s home loan eligibility on the basis of his income, job stability, credit score, existing liabilities, employer’s profile, business stability (if self-employed), etc., The lender also conducts a field investigation, wherein its representative calls or visits the applicant’s home/office to ascertain or validate the details provided by them.
Step 3: Property Assessment
In this step, lenders conduct verification and legal check on the property that the applicant had pledged as collateral at the time of loan application. All property related documents such as title documents (in case of a resale property), sale agreement, no objection certificate, occupancy certificate, etc. are verified by the lender to ascertain its title is clear and is not involved in any dispute. Technical inspection of the property is also carried out by the lender’s representative to check if the property is constructed as per the sanctioned plans and applicable norms. Through technical inspection, the lender also assesses the market value of the property.
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Step 4: Loan Sanction
- Sanctioned loan amount
- Applicable rate of interest
- Type of interest rate – Fixed or Variable
- Loan tenure
- EMI (as applicable) payable
- Validity of the sanction letter
- Other terms and conditions
Pre-approved Home Loan Sanction Letter
Step 5: Loan Disbursal
Some banks and HFCs perform property checks after the applicant accepts the loan sanction letter. On receiving the loan acceptance, the lender requests the applicant to furnish the property documents for verification. Once the document verification and all other checks are clear, the lender drafts the loan agreement. Once the applicant signs the loan agreement, the lender disburses the loan.
Lenders disburse the loan amount in a single instalment in case of ready-to-move-in properties.
However, home loans availed for under-construction properties are disbursed in tranches or phases based on the progress of the property construction. Until the final disbursal of the loan amount, the borrowers may be required to pay Pre-EMI interest, wherein every month the borrower pays the interest cost incurred on the disbursed loan amount from the date of initial disbursement until the date of commencement of regular EMIs.
Note: The above steps are indicative as the process might differ from one lender to another.
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FAQs on Home Loan Process
How much is the processing time for a home loan?
It usually takes 2 to 4 weeks for a lender to process your home loan application. However, the actual home loan processing time can widely vary across lenders and loan applicants. In case of pre-approved home loans, the loan processing time might be lower as the applicants already meet most of the eligibility criteria set for the loan.
What is the difference between full and partial disbursement of home loan?
In full disbursement, your lender releases the entire loan amount in one go. Lenders usually offer full disbursement for home loans availed to purchase ready-to-move-in properties. However, in partial disbursement, the lender releases the loan amount in stages based on the progress of the home construction.
What is a home loan sanction letter?
Home loan sanction letter is an initial loan approval that a bank/HFC extends to an eligible applicant. It includes loan details such as the loan amount, interest rate, tenure, repayment schedule, prepayment charges, security/collateral, validity period and other important terms and conditions.