According to reports, the Indian home loan market is expected to see a growth of around 22% during years 2021-2026. This is because financial institutions offer loans now at interest rates as low as 6.40%. Here are the steps for home loan verification process that an individual must know.
Steps to follow for home loan verification process
Following are the steps that individuals need to follow for the home loan verification process.
Step 1: Individuals first need to fill up the application form and submit it to a lending institution for approval
Step 2: The second step that individuals need to take is paying a certain fee online to start the housing loan verification process
Step 3: After that, the lending institution will verify the information provided by the borrower, like their income details, job background, place of residence etc.
Step 4: Disbursement process will begin after the documents are verified
Step 5: Individuals also need to sign the property documents and submit them to the lending institution
Step 6: After submission of both personal and property documents, individuals need to make the down payment
Step 7: Besides verifying the personal documents, the lending institution will also verify the property documents
Step 8: After the verification process is complete, the lender will disburse the loan amount to the borrower
Additionally, the lending institution representatives might visit the property as well. They will perform a technical check of the property seeing the property age, building integrity, and other components.
Besides knowing home loan verification process, individuals must also know the eligibility criteria required to avail of a home loan.
Eligibility criteria to apply for a home loan
Individuals must meet these eligibility criteria before taking a home loan.
Age factors: Any individual aged 18 to 70 can opt for a home loan from any reputed lending institution. Maximum lenders stretch the home loan tenor for repayment to up to 30 years. Thus, the maximum age during loan repayment can be 70 years. Younger home loan applicants always have a higher chance of loan approval with long tenures.
Employment status and income: Salaried employees of central/state governments, reputed corporates, PSUs and leading MNCs get home loans at lower interest rates. However, the tenor of employment or experience varies according to different lenders. It can be 2 years of experience for some, while it can be 3 years for others. On the other hand, a business should run for 3 years if the borrower is self-employed.
Credit score: The home loan lending process becomes much easier if an individual has a credit score of 750 and above. They also have chances of availing of home loans at lower interest rates.
For example, two borrowers go to a lending institution to avail of a loan. Person A has a credit score of 600, whereas person B has a credit score of 850. The lending institution might provide a loan to both, but person B would have a higher chance of loan approval. Person B can also avail of the loan at lower interest rates.
Repayment capacity: Lending institutions generally sanction a home loan to individuals whose monthly EMIs don’t exceed 50% of their total income. Opting for a higher loan amount for a longer tenure will decrease the monthly EMIs. But on the other hand, it will increase the principal amount.
Property assessment: Another eligibility criterion present for availing of a home loan is property assessment. The lending institution would send their representatives to assess the property and see its physical conditions. They would also check its specifications and market value to decide the amount of loan they can sanction.
According to RBI guidelines, the maximum loan a lending institution can offer is 80% of the property’s value. The rest 20% is the down payment that the borrower has to make. If an individual contributes more down payment, it will reduce his overall loan amount.
Individuals can use a home loan eligibility calculator to check how much loan they are eligible for. These calculators are available online on the websites of lending institutions. This ensures that the borrower is well aware of the amount of loan they can get and financially plan according to that.
If an individual does not meet any of these criteria mentioned above, they can still opt for a home loan. In that case, they have to bring a home loan guarantor with them. A home loan guarantor can be anyone related to the applicant with excellent financial reports and credit scores. The guarantor has to take responsibility to repay the EMI or the loans if the applicant cannot.
Furthermore, several lending institutions offer pre-approved offers to their customers to make this home loan process easy and quick. Borrowers can enter their names and contact numbers to check their pre-approved offers on unsecured and secured products.
To sum it up, individuals can easily avail of a home loan by meeting these criteria given above. Once they become eligible, they can apply for a home loan and follow the steps required for home loan verification process. They can get the application forms online or directly visit the lender’s office.