Every person has a dream to get a house for his family in his life. But with time the prices of houses increase rapidly and in such a situation it is impossible for a middle class man to take home. But it is good for those banks that give home loans to build a house and because of which a middle class man can also build a house. The process of taking a home loan is quite difficult, but you can easily take a home loan with little effort by preparing a proper document.
What is Home Loan: If you want to build your own house. But you do not have the money to build a house. In such a situation, you have to borrow money from the bank or any financial institute on interest to build a house. That is called home loan. You can apply for any home loan in any bank. Once you take a loan, you get 20 to 30 years to repay it. The biggest feature of a home loan is that it has to pay interest at a much lower rate than other loans.
Home Loan Process: What do you have to do before taking a home loan?
Step 1: Self-Assessment
- Cost of Property – House Cost
- Own Contribution – Banks only give 70 to 80 percent of the cost of the house, the rest of the 20-30% is required to be done by yourself.
- EMI Affordability – Can you pay loan installments? The EMI of the loan should never exceed 45% of your monthly income.
- Loan Period – The loan period should be as short as possible so that you have to pay interest at least.
Step 2: Choose The Right Bank or Financial institute: Choosing the right bank or Housing Financing Company (HFC) is an important part of the loan taking process. Before applying for a home loan, you have to take care of some things like: –
- Interest rate
- EMI
- Loan period
- Interest Type – Fixed or Floating
- Processing Fees
- Loan Prepayment Terms
- Penalty for Late Payment
- Loan agreement
- Loan Approval Process
- Tax Benefits
- Home Loan Transfer Process
The interest rate of banks varies from time to time. So see that you are charging floating or fixed interest rates. Floating Interest Rate means that as soon as the interest rates will be reduced or reduced by the RBI, your interest and EMI will also change. And Fixed Interest Rate keeps the same interest rate throughout the loan time period
Step 3: Preparation of Documents: The third step comes to prepare a document for taking a home loan. You have to keep some documents ready before taking a loan. like
- ID proof
- Age proof
- Address proof
- Proof of educational qualifications
- Employment details
- Income proof for which you may have to show Income Tax Returns for the last three years.
- Details about the property
- Bank statements
Step 4: Apply For Home Loan: To apply for a home loan, you have to go to the nearest branch of the bank from which you have to take a loan and meet the loan department of the bank who will help you in getting the loan. First you have to fill a form and submit it along with all the documents. At the time of submitting the Home Loan Application you will have to pay the processing fees which can range from 0.25% to 2% in different banks.
Step 5: Evaluation and Verification: The bank will verify all the documents submitted by you and if required, the bank may also ask for some more documents to be fully satisfied. This process may take a few days to complete. After being fully satisfied with the document, the bank starts a field investigation process to confirm that all the facts given about the address and office in the application form are correct.
After this, the bank establishes the Ability to repay your loan. If the bank feels that you are unable to pay the loan and interest costs on time, then it will reject your home loan application. And if the bank finds everything right, then your home loan will be approved.
Step 6: Property Valuation and Verification: The lawyer will conduct independent legal investigation of the property and the lawyer will issue a Title Certificate or Legal Verification Report to the bank. The bank will then get the market value of the property so that the loan amount can be decided.
Step 7: Home Loan Sanction: After all the investigations are completed, the bank gives approval to give the home loan. An acceptance letter is issued to the borrower and signature is done on the home loan agreement. Once the home loan agreement is signed, the bank issues the loan amount.