Step-by-Step Guide to Applying for a Home Loan

When it comes to applying for a Home Loan, the process is easier than ever before. If you fulfil the loan provider's eligibility criteria, the approval comes quickly and easily without hassle. Here is a step-by-step guide to the Home Loan application procedure.

1.Check Your Home Loan Eligibility 

Before applying for a Home Loan, check and ensure you are eligible. Lending institutions have set eligibility criteria based on which they determine an applicant's risk and repayment capacity. The various factors determining your eligibility include the following:

·        Monthly Income

·        Credit Score or Credit History

·        Other Financial Obligations (Existing Loans)

·        Regulatory Requirements

Apart from these, you must have a decent credit score that indicates responsible credit behaviour and  repayment capacity. Moreover, a low Debt-to-Income (DTI) ratio means you have enough disposable income to adjust the EMI amount conveniently in your monthly budget.

Although these are general requirements, the lender may have specific eligibility criteria for partnership firms, LLPs, Indian companies, HUFs, etc. Using an online eligibility calculator, you can check your Home Loan eligibility to determine how much you can borrow. In the calculator, enter your monthly net take-home salary, monthly obligations, interest rate, and tentative tenure. The calculator will automatically show how much you can borrow, the EMI amount and interest cost.

2.Select the Loan Amount and Tenure

Once you are sure you are eligible for a Home Loan, select your desired loan amount and repayment tenure. The loan amount you require depends on the property’s cost, Loan to Value (LTV) ratio, income, and other financial parameters. Tenure is the duration you need to repay the loan in EMIs. It may go up to 25 years, according to your repayment capacity. An online EMI calculator helps select these variables based on your financial capacity.

3.Submit the Application

After selecting the required loan amount, complete the online application form to provide your financial and personal information. Submit the correctly filled application form through the lender's website or app to apply for a Home Loan.

4. Submit the Documents

The next step in applying for a Home Loan is to submit the necessary documents. These include the following:

·        Identity Proof: PAN Card, Aadhaar Card*, Driving Licence, Passport, Voter ID

·        Address Proof: Driving License, Aadhaar Card*, Voter ID, Passport

·        Age Proof: Voter ID, Passport, Aadhaar Card*, PAN card, Driving Licence

·        Signature Proof: PAN Card, Passport

·        Proof of Income: Salary Slips, Form 16, ITR, Profit and Loss Statements

·        Registration Proof with Tax Authorities According to the Business Type

*However, the Aadhar card is not a mandatory document.

Although these are general documentation requirements, be ready to submit some other documents according to your profession and the lender’s request.

5.Loan Sanction

After reviewing your loan application, Kotak Mahindra Bank will initiate the approval process. If they approve the loan, they will sanction it and send you an offer letter containing the loan amount, interest rate, repayment tenure, and other details. You must carefully review and accept the loan offer to begin the disbursal process.

6. Loan Disbursal

After verifying your submitted documents, the lender will disburse the sanctioned loan amount directly to the seller's/builder’s bank account. You can use this loan amount to purchase your desired property and repay it to the lender in easy EMIs spread across the sanctioned repayment tenure.

7.Repayment

Now that you know how to apply for a Home Loan, research to find a lending institution offering the best Home Loan deals. Moreover, check your Home Loan eligibility before applying for a Home Loan. Keep all documents handy, and decide on an appropriate loan amount to finance the purchase without over-stressing your budget. Go through the verification process and read all documents carefully before signing. Once you receive the loan, repay the EMIs on time to gain trust and improve your credit score.