All About the Home Loan Procedure in India for First-Time Borrowers

Housing finance is undoubtedly one of the most popular borrowing options for potential homebuyers. This is primarily due to the extended repayment tenor they offer, and their popularity is fuelled by the current decrease in interest rates and property prices. However, financial institutions reject several loan applications too. 

This is because a majority of new applicants fail to adhere to the specified requirements for qualification. If you are a first-time homebuyer seeking external financing, here is a discourse on the home loan procedure in India to help you make an effective application.

Home loan application procedure

Potential borrowers can follow the given steps to apply for a home loan online.

Step 1: Go to the official website of your choice of lender and navigate to the page displaying the online home loan application form.

Step 2: Fill in this online form with required information like your name, employment type, financial and contact details.

Step 3: After getting your pre-approved offer, decide on a suitable loan amount using a home loan calculator. 

Step 4: Place a request for the same amount by submitting property details. 

Step 5: Complete your application by uploading scanned copies of mandatory documents. Also, make the required security payment.

Upon application, the lending institution will conduct a property appraisal procedure. This includes evaluation of property ownership, size, location, house construction progress, and maintenance. Additionally, lending representatives will also scrutinise submitted documents and your eligibility before sanctioning the home loan.

Eligibility and documentation parameters to qualify for housing finance

Applicants must check if they match the following eligibility parameters to ensure a successful home loan procedure in India.

• Employment status: Applicants must be salaried employees or own a business.
• CIBIl score: Must not be below 750.
• Age: Applicants should be aged between 23 to 70 years.
• Net income: Must be following lender-specific criteria.
• Experience: Salaried individuals must be associated with their present employer for minimum 3 years. Self-employed individuals must own a business with at least 5 years of vintage.

In addition to these eligibility requirements, lending institutions mandate submitting the following documents to complete a home loan procedure in India.

• ID proof, including KYC documents.
• Proof of residence, including any one KYC document, utility bills, and lease agreement.
• Latest passport-sized photographs.
• Property ownership proof.
• Income proof, including salary slips for salaried individuals and audited balance sheet for business owners.
• Other financial documents like bank statements, ITR documents, etc.

Besides meeting all the above eligibility and documentation requirements, first-time borrowers must also keep a few other factors in mind before borrowing a housing loan.

Things to consider before getting a housing loan

Here are a few things to keep in mind before going ahead with the application procedure.

1. Scrutinise your exact loan requirement 

Most borrowers tend to opt for the longest available tenor to reduce EMI burden. Practise borrowing only the required amount and opt for the shortest tenor you are comfortable repaying the sum in. This might increase your home loan EMI but will enhance your interest savings in the end.

2. Compare different lender policies

Always compare the different housing loan interest rate and other policies of various loan providers to pick the one offering the best benefits.

3. Ask about any additional charges

Most creditors levy processing charges constituting up to 3% of the principal amount to finance an effective home loan procedure in India. However, borrowers should always clarify with their lender about the presence of other hidden charges.

Also, look out for your lending institution’s foreclosure terms and pre-payment charges, if any. Check for additional facilities like the convenience of switching between fixed and floating interest rates.