Register | Login
Sign in with:
---------- OR ----------
Create Account | Login
Create account
As a Member You Can:
  • Join clubs to discuss your interests
  • Connect with people like you
  • Share information, seek advice, get support

in Mumbai (change city)
Select City
  • All
  • Delhi
  • New Delhi
  • Gurgaon
  • Noida
  • Mumbai
  • Pune
  • Banglore
  • Hyderabad
  • Ghaziabad
  • Chandigarh
  • Ahmedabad
  • Kolkata
  • Chennai
  • Coimbatore
  • Jaipur
Family Finances Topics..

You are here : home > Family Finances > House Related > Understanding the Home Loan Process

Understanding the Home Loan Process

Nowadays, everyone buys his or her house using a home loan. Read on to learn more about how the process functions.

The house buying process can be easy or fraught with hassles. A big part of the issue tends to involve the home loan. Although obtaining a housing loan is quite a smooth and efficient process, many people find it frightening. This is largely because they go about the process unprepared or do not quite understand how a home loan works. Here is a basic idea of the steps involved in obtaining a home loan.

Constituents of a Housing Loan

A housing loan is not very different from loans for other purposes. A home loan too consists of two parts, namely the principal and the interest. Principal refers to the actual amount you are borrowing as a loan, while interest is the cost of borrowing the loan amount. Repayment of a housing loan is usually for a fixed period such as ten years. Both the principal and interest amounts are combined together to come up with a monthly payment. This is referred to as an equated monthly installment or EMI.

There are two types of interest rates for a housing loan. The first type is 'fixed-rate' wherein the interest rate is fixed at one number for the entire duration of the loan. The second type is 'floating-rate', in which the interest rate is revised periodically. This usually depends on current interest rate levels set by the national governing body.

Applying for a Loan

In loan terms, the bank to which you apply is called a housing finance company (HFC). After deciding what type of loan you want and which bank to apply to, you need to contact the bank and ask them for an application form. Fill in the form and submit it to the bank. Many banks now allow you to do this online.

Besides the form itself, you will also need to submit other documents required by the HFC like proof of identity, income tax details, residence address, employment status etc. You will also have to give a cheque of a specified amount as a non-refundable processing fee. This fee is generally between 0.5 to 1 % of the loan amount.

Validating the Information

After the submission, your application form is processed by the bank. During this process, the bank will validate or verify the details on the application form. This involves checking the residential address of the individual, visiting his office, and checking his employer's credentials.

At this point, the bank may also call you in for a personal interview. In addition, the bank may also contact the people whom you have given as your references. In this stage, the bank actually decides if you are eligible for the loan.

Sanctioning the Loan

Once the bank is satisfied with the applicant's credentials, the loan is sanctioned. The bank issues a sanction letter, which contains details pertaining to the loan amount, interest rate, period of repayment, etc. The letter will also contain the general terms and conditions of the loan.

You will then have to submit all the documents pertaining to the house you are purchasing, including official papers. These documents are considered as security for the loan amount and will remain with the bank until the loan amount is repaid. The documents received by the bank are subjected to scrutiny by the bank's legal department.

Disbursing the Loan

The bank will first visit the property site of the applicant. They will check whether the concerned authorities have legally cleared the project. They will also focus on whether the building adheres to the construction rules. Only after everything is clear, the bank will disburse the loan amount. In the case of an under-construction building, the loan amount will be disbursed in stages, as each phase of construction is completed. If a building has already been built, the entire loan will be disbursed at one time.

Getting a home loan is no longer a tedious process. With increased competition, banks are simplifying procedures to make it easier for applicants to secure loans. Most people who apply for a loan will have it sanctioned in a matter of days.

You may also be interested in:

Healthy Breakfast
Save Edit
Sort by Newest

MR. RASHID OMAR.4 years ago
Welcome to FINANCIAL CREDIT SOLUTION HOUSE, We offer Legitimate Loans with or without collateral at the low interest rate of 2% with maximum guarantee and assurance. we offer loan to people on bad credit,Agricultural Loan,home improvement loan, personal and business loan, student looking for financial help and to companies etc. Any interested one should contact us via with the following information,please complete and summit the information below;
Borrower?s Information..........
(1)Loan Amount Needed:..........
(2)Loan Amount Needed In Words:...........
(3)Full Names:.............
(5)Valid Cell Phone Number Or Tel Phone:........
(6)Purpose Of Loan:...........
(7)Monthly Income Level:
(10)Gender: Male Or Female:..............
(12)Loan Duration:..............
(14)Age: ...................
TODAY DATES:...................

Mr Rashid Omar (CEO)
Vanita.5 years ago
could you tell me the documents needed for house loan and how much time it takes to finalize?
leolobo.5 years ago
I have not finalized the property, Can I apply for home loan first and get the sanctioned amount and then select the property?
Diana Cheng.5 years ago
I am Diana Cheng from Kuala Lumpur here in Malaysia if you need loan the contact Abu Abdullah Loan Firm because that is where I got my loan from a week ago without credit check and low interest rate of 4% you can contact them with this email and tell them I refer you to them
Back to Previous Page   |   More on Family Finances Index

Discussion Forum - Recent Posts
Have you ever applied for a housing loan? Do you think applying for a loan has become easier nowadays? Does easy availability of loans tempt people to apply for large amounts?
In answer to your question, yes I think it' s easier for a person to acquire a home loan these days... but that' s just because the banks are willing to take their money! Interest rates are high in m...
In my opinion, home loans are a great way for banks to cheat people of their hard-earned money. All banks charge such high rates of interest that are almost as much as the loan amount itself. When you...
One should always ensure that one does not take too high a loan. Many people put their entire salary into paying the monthly EMI. This does not leave much for other expenses like food, bills, etc. Plu...
view more >>
Money Matters
RE:Miserly In laws & Hubby
Hello dear this is really weird behave of your husband towards you, please ... - Anaida    read >>

RE:Miserly In laws & Hubby
According to me you should not act like this as this is really sad to see t ... - Anita    read >>

RE:Miserly In laws & Hubby
Hi dear if you want you can speak to some women empowerment organization as ... - Aditi    read >>

RE:Miserly In laws & Hubby
Hello friend this is not acceptable and why are you not raising your voice ... - Aditi    read >>

All tips on House Related
You ever wanted in one place.
No need to go anywhere else. No spam.

*No spam only genuine emails
Follow us on:

Featured Articles - Infertility | Baby Development | Health and Fitness | How to Get Pregnant | Parenting Advice | Weight Loss | Pregnancy Advice | Name Numerology
Baby - Baby Photo Contest | Lucky Names | Lucky Birthdates | Horoscopes | Chinese Calendar | Compatibility Test | Fun Zone
Parenting - Message Boards | Planning a Baby | Pregnancy | Parents of Babies | Baby Names | Baby Name Poll | Birth Announcements | Parenting Quiz
Family - Cooking Club | Love & Relationships | Beauty Tips | Kids Weight Calculator | Recipe Maker
General - Calorie Counter | Personality Quiz | Love Signs | Compatibility Quiz
Home | Site Map | Privacy Policy | Comments or Suggestions | Indiaparenting News Articles | Contact Us | Advertise with Us | | RSS
Copyright (c) 1999 - 2018 India Parenting Pvt. Ltd.