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How to avail home loan: All you need to know about eligibility, documentation, cost

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ET CONTRIBUTORSLast Updated: Mar 07, 2022, 06:30:00 AM IST

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Synopsis

Details about ongoing loan (if any) and the property are needed too. After physical inspection of the property, and checking the credit score of the borrower, a loan sanction letter is issued.

Buying a home involves a pool of substantial funds. If there is a crunch, people usually avail housing loans which can be obtained at a relatively low rate of interest as compared to other personal loans. Home loan converts the outstanding amount plus interest into EMIs.

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Check eligibility

One can check their eligibility for the loan amount using online eligibility calculator tools on the basis of nature of their profession, income, etc.

Documentation
A loan application form needs to be filled out along with documents for identity, address and income. The income documents may include salary slips, ITR form, bank statements, etc. Details about ongoing loan (if any) and the property are needed too. After physical inspection of the property, and checking the credit score of the borrower, a loan sanction letter is issued.

Loan agreement

If the terms of the inprinciple approval are agreeable by the borrower, a loan agreement is entered between the borrower and the lender. It is mandatory to submit original property papers at the time of loan agreement. Stamp duty for the loan agreement is charged at 0.1 to 0.2% of the loan amount.

Disbursement

In case of an under-construction property, disbursements are linked to the work progress. However, for a ready-to-move-in property, the entire amount may be disbursed and paid to the seller at once, after due verification.

Cost
A loan processing fee is charged by the lender which needs to be paid at the time of submission of the application.

Points to note

Home loan sanction letters usually carry a validity period of six months, before which the property needs to be purchased.
A home loan insurance is needed to be taken by the borrower.

(Content on this page is courtesy Centre for Investment Education and Learning (CIEL). Contributions by Girija Gadre, Arti Bhargava and Labdhi Mehta.)

(Disclaimer: The opinions expressed in this column are that of the writer. The facts and opinions expressed here do not reflect the views of www.economictimes.com.)