A Complete Guide to Applying for Home and Mortgage Loans Together
Every person wants to own their own home. It is a way to ensure you have security for the rest of your life that you can’t get from renting a house. But it is not easy to buy a house. The process of buying a home is detailed, from saving for years to put down as a down payment to finding a good place to invest. Most people think that getting a home loan is the best way to buy property because it costs a lot of money. You can get a home loan and pay it back in easily Equated Monthly Instalments (EMIs) over up to 30 years.
How Does a Home Loan Work in India?
Home loans are a contract between borrowers and lenders. In most cases, the bank or NBFC directly pays the owner or builder the home loan amount instead of the borrower. Borrowers typically repay their loans in EMIs over the course of their chosen repayment period, with interest added to the principal balance. You can now get a home loan at one of the lowest rates in the industry, with a lot of openness and trust.
In India, it only takes a few steps to apply for a home loan. Before digital banking, these steps were hard to understand and took a long time. The process of getting a home loan today is not only easy but also quick. Most loans are disbursed to you within a week after all the necessary paperwork and checks from the bank.
How to Get a Mortgage Loan in India
Here’s a step-by-step look at how to apply for a mortgage loan:
- Fill out the form to apply
The first step in getting a housing loan is to fill out an application form. It is the most fundamental document. You must include basic information about yourself, including your name, address, mobile number, profession, monthly and yearly income, educational background, etc. You should also describe the property you want to buy, how much it will cost, and the down payment you can pay. Additionally, you must submit documentation, i.e., proof of identity, address, income and tax returns for the last three years, and other financial documents.
- Document verification
It’s important to know that many people apply for mortgage loans every day. Making sure your paperwork is in order will speed up the time it takes to process your application. At this point, the lender checks the information given by you.
The lender focuses on the following papers:
- Residential address
- Employment details
- Credentials of the employer
- Phone number
- Employer number
- Background checks
Banks check all the documents and do a background check on the borrower. In order to do this, the bank may look into the information you put on the form.
Getting your credit report is easier now that RBI has made it a requirement for credit reporting agencies to give their customers a free credit report once a year. A credit score above 750 is good, and it shows how reliable a person has been in paying back loans in the past.
- Pay a fee for processing
After the loan application has been sent in, it is crucial to pay the loan processing fee. Processing fees can differ from one lender to the next. Home loan processing fees are usually between 0.25 and 1 percent of the amount borrowed.
Lenders charge customers a processing fee to cover the costs of managing their loan accounts. The agent’s commission may be rolled into this total. You can always talk to the lender about the processing fee to get a good offer.
Even though banks and NBFCs have a set way of figuring out the processing fee, there is no harm in asking for the processing fee to be lower.
- Check your repayment ability
The most important part of getting a home loan is ensuring the borrower can pay it back. Your request for a home loan will be approved or turned down by the bank based on how confident it is in your ability to pay back the principal and interest on time. If the bank gives conditional approval, then all of the conditions must be met before the loan can be paid out. It is wise to take a loan based on your income and ability to save enough money for monthly EMIs.
- Take care of the property papers
After you get an official letter approving your loan, you must hand over the documents to the lender. The bank keeps these documents until the loan is paid off in full. The original property documents usually show the entire chain of ownership acquisitions and transfers until you sign the Sale Agreement. They also show the seller’s name, ID, and proof of address, among other things. Before approving the loan, the bank checks all the property documents. The bank also sends a representative to the property twice, before and after the loan is approved.
- Loan disbursement
Lastly, after all of the paperwork is done, the loan is disbursed. The creditor may ask you to prove that you have saved up for the down payment. Loans are typically disbursed to the seller or developer of the purchased property.
Different lenders have different times for giving out loans. Some move quickly and give out the loan as soon as all the criteria have been met, while others take longer to get everything in order.
With a home loan, you can buy the house of your dreams. You should do a lot of research on the loans that different banks offer. Digitalisation in India has made the process of getting a home loan simple and quick. You can apply for a mortgage simultaneously with a home loan. Make sure to have the required paperwork to make the process quicker.
Piramal Finance can help you make smart and wise financial decisions. Check out more blogs on their website!
Also Read: Complete Guide On How To Choose The Best Home Renovation And Construction Loan In India
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