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

Help Me Protecting My Home Loan

Although the home loan is an important aspect for restructuring the financial element of the economy, protecting the viability of the home loan is an important criterion since it serves a basic purpose for the interested borrower. Thus schemes must be implemented for the perfect execution of the home loan options. 

Home Loans as we have learned from several discussions are one of the most important aspects of Financial Restructuring in the country thereby bringing about adequate utilization of resources and ensuring full efficiency. Home Loans thus preceded all other loans in terms of importance and significance as it helps in fulfilling the most basic need of the interested borrower- purchasing a home by utilizing the money which has been taken by the borrower from the banking institutions as the loan amount. However, the importance of home loan allows the consumers with the perfect opportunity to protect their loan options from all kinds of disruption to maintain their uniformity and functioning mechanism in times of financial distress. Thus protection can be offered to the home loans in the following manner?

What is a Home Loan Protection Plan or Scheme? 

The existing home loan which is availed by the banking institution of a country can be protected through a protection liquidity scheme which is known as the Home Loan Processing Fee Protection Plan. Through this plan, the borrower can insure his home loan by submitting the claim for the loan to any insurance company that is responsible for providing insurance facilities to the borrower. The working of the insurance facility functions just like any other forms of life insurance and medical insurance plan. In such a case a premium amount is calculated based on the percentage of home loans, payable monthly or yearly basis. 

How does the Home Loan Protection Plan work?

The Home Loan Protection Plan works according to the following set of guidelines. A step by step process is necessary for implementing the loan. Firstly when you are availing of the loan facility you would have to submit a claim for the insurance of the loan facility availed by you. Upon the acceptance of the claim submitted to a recognized insurance company or agency, your loan would be granted efficacy and you would be able to recover the insurable amount in case of emergencies. 

Supposedly you go through a terrible accident and you are deceased. Although the home loan has been taken as you being the guaranteed signatory authority, you are supposed to fill in regulations for appointing a family member as your nominee, one who will be looking after the repayment of the loan if you go through some unfortunate situation. Home Loan processing fee is levied during the insurance process.  Thus upon your death, one of your family members will take the insurance document and submit the claim for granting of insurance to the insurance company. The company which has offered an insurance protection scheme will be then liable to pay off the remaining liability ie- the amount of the loan that has been insured by the institutional facility. Lastly, it is of terminal importance that proper documents are submitted. If there is any discrepancy in the documentation process, then the claim would be completely discarded and no importance would be given to the claim. 

Home Loan Processing Fee is reduced to a minimum to ensure proper regulation of credit facilities.  Thus the proper functioning of the Home Loan Protection Scheme by Karur Vysya Bank Home Loan ensures the popularity of the home loan thereby providing the borrowers with the option of being encouraged to opt for more home loans. 

In conclusion, it is of extreme importance to understand the validity of the Home Loan Protection Scheme in ensuring that the home loans availed can help in regulating the flow of financial credit in the economy. Home Loans through their active purpose-fulfillment objective ensures that the loans fulfill multipurpose essentialities. You should always be aware and careful about protecting your home loan option.