A home is the most cherished possession for any Indian, and a home loan helps in achieving this dream. With this kind of payment, it is possible to own a house today without facing the difficulty of coming up with a full sum. The process to apply for home loan involves important stages. The first place that you should start is by checking your financial status in relation to the requirements posed by the lending firm. To learn more about the process of procuring a home loan, we will learn about it in detail.
What is a home loan?
A home loan or mortgage is a credit granted by various financial institutions to a client with the intention of buying a house. They include residential property, commercial property, and land, wherein the property being sold is used as security for the loan. Repayment normally takes place in a number of equal and regular instalments known as Equated Monthly Installments (EMIs) over a set time.
Types of home loans
Before applying for the application process, it’s important to understand the different types of home loans available in the market.
Home Purchase Loan: This is the most popular one when a person obtains an apartment or another type of premises suitable for immediate occupancy.
Loan for Construction of House: This loan is intended for the construction of a house from scratch, or as people call it, a home construction loan.
Home Improvement Loan: If you have a home that you wish to alter or build a new wing, this loan may assist you.
Balance Transfer: It helps in shifting the existing home loan from one lending company to another while enjoying a lower interest rate.
Process of a Home Loan Application
The procedure to apply for home loan involves different steps:
Check Your Eligibility: Try using the free online calculators to estimate your chances based on your income, credit score, and others.
Choose a Lender: This is important in a bid to determine which among the lenders presents the most favourable interest rates as well as processing fees and other related charges.
Gather Necessary Documents: It may take the following documents: income proof, residential proof, age proof, and other property documents, among many others.
Submit the application. Complete the loan application form correctly, and attach all necessary documents to the application form.
Loan Processing: The lender will then check your documents and review your qualifications to forward them to the credit check.
Loan Approval: In the event that the loan is approved, a loan sanction letter containing details of the loan sanctioned will be issued to you.
Disbursement: The loan amount shall be drawn down in phases, and in most cases, it will be based on the construction progress (construction loans only). In a home purchase loan, the amount is normally transferred to the seller for the purchase of the home.
Influence of Certain Parameters on Home Loan Approval
There are different factors responsible for influencing your eligibility for a home loan, including:
Income: The income is relevant as it defines the repayment ability of the borrower.
Credit Score: A high credit score helps to borrow a loan, and one is also able to borrow at lower interest rates.
Employment Stability: A stable job with a regular income is preferred by lenders.
Down Payment: If you can offer a larger down payment, it can have positive effects on loan worthiness and the requested loan amount.
Loan for the Construction of the House
A home loan for construction of house is provided by several institutions to meet the needs of people who lack their own and only wish to construct a house for their own use. This type of credit is rather sensible, so it is crucial to forecast expenditures. The construction plan and estimate of the house should be very well developed before sourcing for the loan. In some circumstances, the loan amount is disbursed in stages as construction work progresses.
Conclusion
Although, to apply for home loan application is not a very simple process it’s not a very complicated one if planned well. Thus, understanding important home loans and some factors of the eligibility criteria and receiving such loans’ will allow one to make reasonable decisions. Perform a lender’s comparison and negotiations and look for a loan that is suitable for your needs.