Buying a house is a major financial goal most people want to achieve. However, buying a property can be daunting as there are so many things you need to consider before you go ahead and seal the deal.
This apprehension arises because buying a house involves putting a big chunk of your savings into a single real estate investment.
But don't worry, we are here to assist you. The home loan process entails many steps, and navigating through them can be challenging, especially if you are a first-time buyer.
We have broken down the entire home loan procedure into ten steps to simplify your path to owning a house. It will help you understand each in detail and effectively manage your expectations.
Step-by-step procedure for Housing Loan
1. Home Loan application form
To initiate your house loan process, you can visit one of Axis Bank's branch offices to obtain a copy of the form. This form is designed to collect your personal details, employment history, income sources, educational background, and specifics regarding the property you intend to purchase.
Once you have completed the application form, you will need to submit the following documents:
- Identification Verification: Aadhaar Card, PAN Card, Passport, Driving License
- Address Proof: Aadhaar Card, Passport, Driving License, Utility Bills (e.g., electricity bill, property tax receipt)
- Age Proof: Birth Certificate, 10th Certificate
- Income proof: Bank Statements, ITR, Salary Slips
- Business Documentation (for self-employed individuals): Balance Sheets, Profit & Loss Statements, Business License, Proof of Business Address
- Property Details: Approved Building Plan, Consent Letter from Society/Builder, Construction Cost Estimate
2. Pay the processing fee
Once you have completed the application form, the next step in the home loan process involves paying the processing fee to the bank or lender. This fee is non-refundable and serves as an initial charge to kickstart the home loan procedure and maintain the active status of your loan account.
3. Bank discussion
Following submitting your application form and completing necessary documentation, the bank may request a face-to-face or telephonic discussion with the applicant. This discussion aims to gather additional information about you and verify your ability to repay the loan.
4. Document verification
Once you have provided all the necessary information, the bank evaluates it thoroughly. A bank representative may even visit your home or workplace to verify the details provided and check the references mentioned in the application form.
Throughout the entire home loan process, you must maintain transparency. Banks examine personal and employment details, focusing on your creditworthiness.
5. Approval process
Upon approval of your application, the bank will issue a sanction letter outlining the approved loan amount, applicable interest rate, and other relevant terms and conditions. The significant reasons for loan approval are good employment track record and high creditworthiness. If your loan application is rejected, the bank will communicate the decision and the reasons for rejection.
6. Sanction letter
Once your loan is approved, the bank offers you a sanction letter. This letter outlines the total loan amount, interest rate (fixed or floating), disbursal and repayment schedule with loan tenure, and all the applicable loan terms and conditions. Carefully review the sanction letter, sign and return the acceptance copy to the bank, acknowledging your agreement with the stated terms and conditions.
7. Technical checks and site estimation
After officially accepting the offer letter, the bank focuses on the property you intend to purchase. If a property still needs to be finalised, you can request for a time frame to make their selection.
A qualified expert such as a civil engineer or architect will conduct a technical inspection of the property. This assessment evaluates the construction stage, quality, layout, and compliance with regulations. For ready-to-move-in properties, banks also check maintenance and property value.
You may have a technical inspection fee and site assessment charge to the lender, which can be included in the upfront payment or settled separately.
8. Legal verification
Once a property is chosen/finalised, you must submit all original property documents to the bank. These documents serve as collateral for the home loan and banks retain them until the loan is paid back.
The original property papers typically include the following:
- Seller's name, identification and address proofs.
- Property name and address.
- Written documents if the seller is not the primary owner.
- No Objection Certificate (NOC) from the primary legal owner.
- NOC from the statutory development board representative and the cooperative housing society.
- If the land is leased, a lessor's NOC is also required.
The original property papers remain with the bank until the home loan is completely repaid. After submitting property papers, the bank conducts a thorough legal check. It involves verifying the sale documents between the applicant and the seller.
The original documents are forwarded to the bank's lawyer for a detailed examination. Approval by the lawyer indicates that all submitted documents are clear and authentic, ensuring smooth processing of the home loan. You may be requested to provide additional documents for verification if any discrepancies are found.
9. Signing the loan agreement
Once the bank completes the technical and site estimation and the lawyer approves all paperwork, the next step involves the final registration of the deal. The bank's lawyer finalises the loan documents, drafts them, and ensures they are stamped and signed accordingly.
After the paperwork is completed, you must sign the home loan agreement. You must submit post-dated cheques covering both parties' initial 36 months or the agreed-upon duration.
10. Loan Disbursal
Upon completing the necessary verification, the lender will prepare the Memorandum of Execution (MOE), which includes the loan documents. These documents will then be stamped and signed. Once all legal requirements are met and you have signed the home loan agreement, the bank or financial institution will disburse the loan amount. The home loan processing time is 1-2 weeks.
If your property is completed, you will receive the full loan amount. However, if it is still under construction, the disbursement may occur in stages based on the progress.
Also Read: Ways to choose the right Home Loan for your needs
Conclusion
It is important to dedicate time to researching, calculating eligibility, and selecting the most suitable home loan provider, as this choice can influence your entire home loan journey. Now that you know how to apply for a home loan process step by step, you can confidently plan your home purchase without any hesitation or uncertainty.
It's essential to ensure that you provide accurate information to the lender, adhere to each step of the home loan application process diligently, and thoroughly review all details before signing the agreement.
Axis Bank provides convenient options with minimal documentation requirements. We handhold you through the entire home-owning journey.
Disclaimer: This article is for information purpose only. The views expressed in this article are personal and do not necessarily constitute the views of Axis Bank Ltd. and its employees. Axis Bank Ltd. and/or the author shall not be responsible for any direct / indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information. Please consult your financial advisor before making any financial decision.
