Bank Home Loan Guide
Last Update - 23-November-2023
Purpose of the article: Bank home loan involves multiple steps and lot of paper work. This article tries to give an overview of different steps involved in bank home loan sanction. This procedure is same for home loan, mortgage loan and TopUp loan over existing home loan.
Purpose of the article: Bank home loan involves multiple steps and lot of paper work. This article tries to give an overview of different steps involved in bank home loan sanction. This procedure is same for home loan, mortgage loan and TopUp loan over existing home loan.
STEP-1 : Meet Banker and know loan amount eligibility
- Customer first should meet banker with Aadhaar, PAN and recent salary slips (last 3 months)
- Banker will check CIBIL records, existing loan EMIs and other salary deductions.
- Banker will calculate and inform maximum loan amount eligibility based on above information.
Tip-1:- If salary/income is not enough to get required loan amount, few extra incomes (like estimated future rental income of new flat, already existing property home rentals, agricultural income for AG lands from MRO) can be added to customer income.
Tip-2:- If customer has existing other loan EMIs, he can close some loans to get more eligibility for home loan. If existing loan is closed, that EMI will not be deducted from income. We can get more loan amount eligibility.
- Customer first should meet banker with Aadhaar, PAN and recent salary slips (last 3 months)
- Banker will check CIBIL records, existing loan EMIs and other salary deductions.
- Banker will calculate and inform maximum loan amount eligibility based on above information.
Tip-1:- If salary/income is not enough to get required loan amount, few extra incomes (like estimated future rental income of new flat, already existing property home rentals, agricultural income for AG lands from MRO) can be added to customer income.
Tip-2:- If customer has existing other loan EMIs, he can close some loans to get more eligibility for home loan. If existing loan is closed, that EMI will not be deducted from income. We can get more loan amount eligibility.
STEP-2 : Legal and Valuation reports for the property
LEGAL OPINION :
- After eligibility, customer has to get legal opinion report for the property. Bank will have set of lawyers enlisted in their panel.
- Customer has to get legal opinion for the property, from one of those lawyers.
- In general, Bank Manager would suggest one lawyer from the panel. They will have contacts with them.
- Meet the Lawyer with complete set of documents, link documents and other copies.
- Lawyer will give legal opinion report, only if he is satisfied with all documents.
VALUATION REPORT :
- After legal opinion, collect all documents and opinion report from Lawyer and submit to Bank Valuer.
- Bank will have set of Valuers enlisted in their panel. They will visit the property and give valuation of property.
- In general, Bank Manager would suggest one valuer from the panel. They will have contacts with them.
- Based on valuation, bank will give loan upto 80% of property value.
Tip :- Take photocopy of legal and valuation reports, before submitting to Bank.
LEGAL OPINION :
- After eligibility, customer has to get legal opinion report for the property. Bank will have set of lawyers enlisted in their panel.
- Customer has to get legal opinion for the property, from one of those lawyers.
- In general, Bank Manager would suggest one lawyer from the panel. They will have contacts with them.
- Meet the Lawyer with complete set of documents, link documents and other copies.
- Lawyer will give legal opinion report, only if he is satisfied with all documents.
VALUATION REPORT :
- After legal opinion, collect all documents and opinion report from Lawyer and submit to Bank Valuer.
- Bank will have set of Valuers enlisted in their panel. They will visit the property and give valuation of property.
- In general, Bank Manager would suggest one valuer from the panel. They will have contacts with them.
- Based on valuation, bank will give loan upto 80% of property value.
Tip :- Take photocopy of legal and valuation reports, before submitting to Bank.
STEP-3 : Loan Sanction by Bank
- After getting legal and valuation reports, actual loan processing work by Bank starts now.
- Bank will collect loan application, customer documents (salary slips, ITRs), legal and valuation reports.
- They will process the documents and customer profile, sanction the loan in 4-5 days.
- After getting legal and valuation reports, actual loan processing work by Bank starts now.
- Bank will collect loan application, customer documents (salary slips, ITRs), legal and valuation reports.
- They will process the documents and customer profile, sanction the loan in 4-5 days.
STEP-4 : Loan documentation and disbursement
- After loan sanction, customer should come to bank and sign all the loan documents and agreements.
- This is called loan documentation. Customer has to do 100+ signs and pay loan charges at bank.
- Customer has to submit property original documents to bank now.
- After documentation, Bank will create loan account and disburse amount from loan account to customer.
- Mortgage: At the end, customer has to complete mortgage of property to Bank at SRO office.
- After loan sanction, customer should come to bank and sign all the loan documents and agreements.
- This is called loan documentation. Customer has to do 100+ signs and pay loan charges at bank.
- Customer has to submit property original documents to bank now.
- After documentation, Bank will create loan account and disburse amount from loan account to customer.
- Mortgage: At the end, customer has to complete mortgage of property to Bank at SRO office.
Home Loan Charges by Bank :
Loan processing fee - 0.4% of loan + GST - Min.10000/- to Max.25000/-
Legal Opinion and Valuation charges - 10,000/- to 15,000/- (based on loan amount)
Property insurance (mandatory as per RBI) - around 25,000/-
Miscellaneous other charges - around 1000/-
Flat Mortgage charges - 0.5% of loan + 400/- = 15,400/-
Loan processing fee - 0.4% of loan + GST - Min.10000/- to Max.25000/-
Legal Opinion and Valuation charges - 10,000/- to 15,000/- (based on loan amount)
Property insurance (mandatory as per RBI) - around 25,000/-
Miscellaneous other charges - around 1000/-
Flat Mortgage charges - 0.5% of loan + 400/- = 15,400/-
Afterword: Bank loan involves lot of paper work from different sources. If above order is followed, it would be easy to process the loan by Bank. Legal opinion from Lawyer is the most critical part. If there are any shortfalls or incomplete set of documents, Lawyers don't give opinion. If Lawyer doesn't give opinion, customer can't proceed to loan.