What Happens Once the Home Loan is Sanctioned?
Want to buy a home for your family but lack the funds for it? There’s absolutely no need to worry! You can apply for an easy home loan and fulfill your dream. A home loan today is available at interest rates that are quite competitive. Once you have chosen the desired lender and submitted all the required documents, the lender will check all the information provided and see if you are eligible for the loan or not. In the meantime, you can use the home loan calculator to know the EMI amount you will have to pay if your loan application gets approved; this will help you plan your finances better.
If the lender is satisfied with all the information provided and feels extending a home loan to you would involve minimum risk for them, then your loan will be sanctioned. The lender will then send you a loan sanction letter detailing the terms and conditions of the home loan.
What does a Home Loan Sanction Letter Contain?
The home loan sanction letter sent by the lender is an important document that contains the following details:
- Total sanctioned loan amount
- Home loan Interest rate
- Type of interest rate, whether fixed or floating
- Loan Tenor
- EMI (as applicable) payable and schedule
- Tax benefits available
- Validity of the sanction letter
- Other terms and conditions
If you are satisfied with the offer mentioned in the sanction letter, you can share a signed copy of the same with your lender stating your acceptance. This acceptance must be conveyed to the lender within a stipulated period so that they can start the disbursement process.
What is the Procedure After Home Loan Sanction?
The disbursement of the home loan is the procedure after the home loan sanction. After the lender is satisfied with property-related verification and evaluation, the disbursement process begins. The lender carries out legal and technical verification of the property. The following is done:
- Property Assessment – A technical officer inspects the property you want to buy and the property used as collateral, its stage of completion, maintenance, surrounding area, etc.
- Document Scrutiny – Property documents are also scrutinized by a lawyer. The bank accepts only the original property documents. The No Objection Certificates (NOC) must also be submitted to the bank.
- Property Registration – You need to visit the sub-registrar office for the registration of your property. Stamp duty and registration charges will need to be paid by you. Then you will receive a copy of the Sale Deed and the other copy will go to the lending bank.
- Pay Your Part – The bank will need proof of your contribution to the loan. This is your down payment. You will need to submit the bank statement, with a cheque or net banking details of how and when you transferred the money to the builder.
- Loan Disbursement – Once assessment and document scrutiny are done and the property gets registered in your name, you will need to submit the final processing fee to your lender by cheque. After receiving the processing fee a cheque for the approved loan amount is prepared by the lender. Thus, after document submission and clearance, the loan amount is credited in favor of the builder/seller within 7-10 working days.
The next procedure after home loan sanction is loan disbursal. There are many different ways of loan disbursal that your lender can adopt depending on the terms and conditions of the home loan accepted by you. Let us look at some of these options.
Full Disbursement: In this type of disbursement, the lending institution hands over the entire amount of the loan sanctioned to the borrower at once. If you are buying a house from a builder, the cheque will be made in the name of the builder.
Partial Disbursement: In the case of partial disbursement, the lending institution disburses the loan amount in installments. For instance, if you are buying a residential property that is under construction, the disbursement amount will be released in parts based on the stage of construction.
A processing fee will need to be paid after this which marks the start of the loan process. Also, the actual loan amount will reflect in your bank account or will be directly given to the builder.
So, the procedure after home loan sanction is the main one as it is the final stage in the loan process. It is at this stage that the loan amount sanctioned actually reflects in your or the builder’s account and finally, the home loan process begins. Make sure your loan amount is something that you can repay on time so that the loan sanction and disbursal are easy. A good rapport with the lender can also help you get a good deal and easier disbursal of the loan.