By V Swaminathan
Searching for a house that you can finally call your own home takes time. And, once finalized, if you want to take a home loan to buy the residential property, there’s a simple process followed by banks and other lending institutions before handing over you the loan amount. The process starts with applying for a home loan, followed by sanctioning of the loan and finally the disbursement. Here’s a run-down on the process leading up to the sanctioning and disbursement of home loans.
Loan application process
Initially, the loan applicant has to first send the application to the bank and then the lender decides whether to approve the loan or not. After doing the background verification check, and also a thorough check of the documents, the bank then sends a notification of approval to the applicant for the loan. Also, the bank checks the income and CIBIL score of the borrower before approving the loans.
The sanctioning of the loan is the process in which the bank approves the loan of the applicant. The bank provides loans according to the income of the borrower. If the loans are sanctioned then in that case the borrower can avail a particular amount of the loan which is being sanctioned by the bank.
The bank approves the loans up to 80% of the property value to the borrowers. The borrower can avail an even lower amount of loans compared to the higher eligibility. The loans can be repaid over the years of which the tenure is being approved.
The sanctioning process is the approval process in which the bank gives approval for the loans and later disburses the loan amount. The sanctioning confirms that the loan is being approved and thus the borrower can proceed ahead with the purchase of the property.
Once the bank approves the loans then in that case the bank provides the sanction letter which needs to be shown to the real estate developer to confirm the booking of the flat and the applicant can move ahead with the down-payment.
In the sanctioning process, the borrower receives funding installment wise and in the case of the resale property, the lender disburses the complete loan amount at a time.
The loan disbursement is done after the sanctioning of the loans. Thus the disbursement helps the buyer pay the money to the buyer and accordingly the buyer can complete the payment process of the property.
In case of the disbursement in case of the resale property the bank credits the entire amount in the bank account of the borrower, while as in the case of the new construction ones the lender pays the installment amount to the builder as per the agreement and also according to construction work being done.
The disbursement of the loans requires the property documents for the proposed property and also the estimated cost of the property. If the price being quoted by the applicant is found appropriate by the bank then in that case the bank sanctions the loans of the borrower after the completion of the formalities the bank disburses the loan amount in the borrower’s account.
The bank starts collection of the EMI immediately after the disbursement of the loans. The installments being charged is being expected to be paid on time by the borrowers. Thus the disbursement of the loans after sanctioning is necessary to be done on time in case of the purchase of the house. The buyer can get possession of the property only after the complete payment of the property.
Loans can be taken from any of the lenders for new construction property as well as for the resale property. The loans can be taken from any of the lenders amongst the private banks, co-operative banks or public sector banks, or NBFC’s. The loans can be approved for a tenure of a maximum of 30 years. The interest rates for the loans are in the range of 6.40-12% per cent per annum. The loans being taken should be repaid on time by the borrower to avoid a penalty being charged. Thus the interest rates for the loans are available at competitive interest rates by the borrower.
(The author is CEO, Andromeda Loans and Apnapaisa.com)