Cracking the home loan application process

You can align your finances to match the application and have the disbursal finished right on time to move ahead with the purchase.

Buying a house is no less a task than walking a tightrope for the first time. There are many simultaneous factors to consider and many calculations to make with your finances. Many people falter in the loan application process, but any difficulties can be easily surmounted with correct planning.

The following are four ways to proceed with a smooth loan application process:

1. Opt for a pre-approval. Most of the delays in the home purchase process can be attributed to applying for the loan quite late. Once you apply, the lending institution initiates the background checks and evaluation into the proposed property. This might take some time, after which the institution checks the applicant’s credentials. We suggest that you opt for a pre-approval on your private home loan while you continue looking for houses. Once you have the approval and you select the property, the disbursal process does not take any time.
   
   
2. Select the house. You have a clear idea of the kind of house you want to purchase, but it must fit within the parameters of what you can pay. Once you know how much private home loan you can expect to get, you can look for houses that fit within your budget. The home selection is also based on such factors as location, proximity to schools, hospitals and entertainment centres, transport connectivity and also the size of the house.
   
   
3. Assess your finances. No housing finance company in India grants a loan up to 100% of the house’s value. Most financial institutions give not more than 80% of the house’s current value. This means that the remaining money must be raised by the applicant themselves. This can come from your savings or by borrowing from private sources such as friends and relatives. The financial institution may also inquire about the source of the residual funds – you can show your bank statements to prove the existence of the monies. Getting a clear picture of your personal finances also helps you assess how much private home loan amount you need to borrow.
   
   
4. Understand the loan process. You can apply for the loan only after you have paid at least 20% of the property’s price to the current owner or real estate developer, and then get an agreement prepared. The agreement must be registered and stamp duty paid before submitting it to the lender for consideration. The loan is disbursed only after all original documents are submitted, requisite NOCs and permissions are obtained and final checks of the property are conducted.