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A Handy Home Loan Guide for Your New House

Buying a house, one of the most important decisions in life, is easier than ever before. However, purchasing a house is not a one-step process. For example, you are buying a house in Chennai. From doing your research on the area you prefer—like Sholinganallur or Thalambur—to choosing the best real estate builder, there are several things to check before buying a house in Chennai.

Apart from doing research, it is essential to see and compare different properties and builders and also stay updated with the current business trends. For this purpose, real estate events in Chennai like the events listed here have become hugely popular in recent years. These events help the buyer connect with real estate builders, innovators, and even bankers because today’s housing market understands the needs of the buyers well.

Once you choose the best real estate developer in the city, you have to start on the paperwork to finalize the deal. This is where home loans come into the picture. A financial aid that helps you purchase your dream home, home loans need to be dealt with meticulously.

A home loan is a certain amount of money that a financial institute lends to a homebuyer at a certain interest rate to make the purchase, where the property is taken as the security. This amount is then paid by the homebuyer in monthly installments. Failure of payment will result in the sale of the concerned property by the lender.

What Are the Options You Can Choose From?

1. Home Purchase Loan:

It is the most popular choice amongst home loans opted by people to purchase houses. Major financial institutes give out very transparent home loans with fair conditions that can be easily met.

2. Home Construction Loan:

This loan has opted for when you are building a new house. You can use the money to build a house the way you want it.

3. Land Purchase Loan:

One can avail of this loan when they want to purchase a plot and construct a house there.

4. Joint Home Loan:

When you have a co-owner or a spouse, this is the ideal kind of loan that assists your purchase.

5. Home Improvement Loan:

The loan pertains to repairs and renovations.

6. Home Extension Loan:

This loan is chosen when you want to add an extra room, a floor, or a garage.

7. Top-Up Home Loan:

This loan gives you the provision to borrow extra money above the already borrowed amount. This is offered based on the bank’s assessment of your repayment ability.

 

How Do You Avail Your Loan?

A bank loan can be availed in 10 steps:

1. The Loan Form and Documents:

The loan form requires you to fill in your personal details, the details of your employment and the property for which you need the loan. The documents to be attached with the form include proofs of your ID, income, age, address, education, bank statements and property details.

2. The Processing Fee:

This is a negotiable fee that the bank uses to manage your loan account. It is 0.25 to 0.50% of the loan amount. The loan account is then handed over to the agent who will handle and process your loan. A small commission is generated to him or her before the transfer of the account.

3. Discussion and Valuation:

If the submitted documents are error-free, the bank will check your papers in two days. In the meantime, it is recommended to physically visit the bank so that they can learn about your interest in repaying the loan before the sanction. Giving false information in any of the documents will lead to rejection of your request.

4. Sanction:

This is the most important process where the bank decides if your request is worthy to be sanctioned. Accuracy is the key to getting a loan sanctioned. Dissatisfaction in any of the documents will lead to rejection. It checks on the annual and monthly income, experience, and qualification of the applicant, the type of job, and the ability to repay the loan. Satisfaction in all these fields is important to process your request.

5. The Offer Letter:

After approving the request, the bank sends out an offer letter mentioning the loan amount, the interest rate, the nature of the interest rate, the methods of repayment, tenure details, and other terms and conditions. The applicant should then sign a duplicate copy of the same for the record, which is known as the acceptance copy.

6. Paper Coordination and Legal Valuation:

After the offer is accepted, the bank evaluates the property and the papers pertaining to the house. The papers have the details of the property, the seller, and No Objection Certificates from the primary owner as well as the statutory bodies. A legal check is then done by the lawyer hired by the bank to confirm the information.

7. Technical Site Valuation:

An expert is sent to the site to double-check the details given by the applicant. These include the progress in construction, the overall time required for construction, the premises of the property, the layout of the house, alignment of the layout with government rules, etc.

8. Value Estimation of the Site:

Since there are many risks involved in lending out money to an individual, the bank carefully estimates the value of the property. This careful evaluation is to avoid malpractices, such as showing inflated rates. This estimation helps the bank fix the total loan amount.

9. The Memorandum of Execution (MOE):

Once the paper works are out of the way, the deal is registered. The documents of the loan are finalized, drafted carefully, signed and stamped. The applicant then signs the agreement and hands over the original property papers to the bank. This stage is called Memorandum of Execution.

10. Disbursal:

In this stage, the loan amount is given in cheque. If the particular bank is not the only source of funds, the applicant has to produce evidence for the same. The interest rates are charged from the day the loan gets sanctioned. If the house is ready to move in, the loan is disbursed fully. If the construction is in progress, it is disbursed partly.

To summarise, remember; before availing a home loan, a comparative analysis of interest rates is critical. Make sure the eligibility criteria of the bank are clear enough and spend time going through every detail of the loan agreement before signing. Lastly, always produce original documents and never lie to the bank that gives the loan. Honesty is the best and the fastest trick to get your loan sanctioned.

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