Home loans make such investments easier and help to accomplish the desire of the dream house that a person aspires to. Home loan is applied by clients in different banks and Financial Institutions to create, reconstruct, renovate, enlarge a new house or an existing house. Usually, Banks or NBFCs take 3 to 4 weeks to sanction the loan and disburse it after following the procedures and evaluating the authenticity of the documents provided. For buying the best Home Loan according to the demands of the applicant one must understand how credit institutions scrutinize home loan applications and how effortlessly home loans can be accessed by the customers.
Numerous Banks provide their clients with different rates of Home Loan and Home Loan Processing Fees, applicants must carefully determine which Home Loan they should get that will put minimal pressure on their pocket. One must complete all the steps that must be followed in the process of getting a Home Loan from a Bank or Financial Institution. The process of loan application involves: Filling up the loan application form and attaching all required documents, paying the processing fees, valuation of the documents ascertained, sanctioning or approval process and processing the offer letter thereafter, and then processing the property papers after legal evaluation.
There are many criteria that the Banks use to evaluate the applications of Home Loan and thereby sanctioning the loan to the appropriate ones. The first criteria is of course the documentation; where documents attached with the application form are cross-checked by every lending Institutions. Along with the documents of the applicant the document detailing the house one is looking to buy is also assessed by the lending institution. The reason behind this is to look into the requisite clearance that property needs from the local government. Once this is assessed, document proof of the applicants like income proof, salary slip, income tax return documents, bank details, address proof, identity proof, bank statement, and other documents are asked for evaluation by the bank.
Secondly, the income debt ratio is examined by the lending institutions. At the time of applying for a Home Loan, one must declare whether he is already paying EMIs for any other loan or not; as this is one of the vital deciding factors of a loan application. For example, if A's monthly income is rupees 200000 and he is paying back another loan with an EMI of Rs. 1 lakh then his current EMI to Income ratio is 50% and EMI he can afford is 0 because the loan amount is applying for is rupees 30 lakh he will have to to pay rupees 30000 as EMI. Therefore in A's case, higher chances are that the Bank or Financial Institution will reject his loan application.
Not only does the interest rate vary from bank to bank but the processing fees of a home loan also vary. Some banks with processing fees percentages (calculated on the loan amount) of home loan are hereinafter mentioned: Axis Bank Home Loan- 0.2 percent, ICICI Bank Home Loan and Karnataka Bank Home Loan-0.25 percent, Indian Bank Home Loan- 0.23 percent, Bajaj Home Finance Home Loan- 0.35 percent, SBI Home Loan- 0.4 percent, HDFC Home Loan, PNB Housing Finance Home Loan, and Citibank Home Loan- 0.5 percent, Allahabad Bank Home Loan 0.53 percent, Yes Bank Home Loan- 1 percent, and many more.
Lastly, the credit score or report of the individual. A strong and high credit score with lofty income helps an applicant to get loan approval within a short span of time. A decent credit score of an individual shows how disciplined the consumer is and this healthy credit history helps the chance of the loan being reviewed and approved shortly. Paying all dues and EMI of loans taken within time enables us to achieve a good credit score.
Also read this: Is Home Loan Secured Loan?