Application Process for a Home Loan

 

This is where banks and NBFCs come into the picture and offer you funds by accepting your loan application. There are many challenges and dilemmas that you may face when you are looking to purchase a new house. Choosing the best Home Loan plan and the bank is a crucial decision in this process. The process of getting a Home Loan is pretty straightforward and similar for all types of lenders, though some additional steps may vary from lender to lender. But the process is not a one-step event, i.e., you cannot just apply directly and ask for the required funds. There is a proper system laid out by each Bank and NBFC that needs to be followed and satisfied by the applicant to be eligible for the loan and get the best interest rates. The Home Loan amount can be used to buy a new house, construct a house, or renovate or extend your existing house. The applicant first needs to fill the application form for the Home Loan, which can be filled online and by visiting the bank branch.

The applicant needs to fill in the following details in the document - 

• Name (first name and surname)

• Mobile Number (personal or office)

• Employment type (salaried/self-employed)

• Address 

• Income (net income after taxes)

• Loan amount required (expected amount based on the house price)

The applicant then needs to submit the application and check the eligibility criteria. Let us take the example of Karur Vysya Bank and the eligibility criteria set by them to offer a Karur Vysya Bank home loan at reasonable rates.

Age: It is a significant determinant of your eligibility and repayment capability. The lower the age, the longer the loan tenure and the more will be the repayment period. The minimum age for availing of a home loan is 21 years. If you are between 21-30 years, then the loan tenure set by Karur Vysya Bank is 30 years for salaried employees and 25 years for self-employed professionals. But as the applicant's age increases, the loan tenure decreases, i.e., if the applicant is 45 years old, then the loan tenure can be a maximum of 15 years. 

Net income: The minimum pay of the applicant should be Rs. 25,000, and there is no maximum cap on the salary of the borrower. 

Employment type and years of service: The applicant must be either a salaried individual or a self-employed professional. The minimum years of service or experience should be three years for the bank to consider your loan application.

Credit history and CIBIL score: There isn't a specific score set to accept or reject a borrower's application, but the lender expects the credit history to be respectable, and the past credit behavior should be good. The lender offers a better interest rate if the borrower's credit score is high (700 or above), while if the score is low, then the borrower has no other choice than to accept the lender's best interest rate.

After satisfying the eligibility criteria for the bank, the evaluation of documents takes place, which is a 2-day process. The lender asks for income proof, residence proof, type of employer, and property papers. Post this, the bank will approve your loan, and the interest rate and the loan amount will be negotiated by both parties based on your credit history and financial strength. After completing all the formalities, the bank and applicant sign the loan agreement, and the loan amount gets disbursed to the applicant's account within hours. 

Conclusion :

You should ensure that you understand each step with diligence and alertness. Since every penny and day counts, it is better to choose the best deal from the most credible lenders to get benefits and reasonable offers. You also should have a proper repayment strategy in mind to repay the loan without any issues. 

Also read this: Home Loan Default