Navigating Homeownership: A Step-by-Step Guide to the Home Loan Process

The demand for home loans has been witnessing a significant surge. After all, the benefits associated with these loans are many. These low-interest-rate and long-tenor loans are easy to repay and the flexibility to choose one’s loan tenor and principal amount allows borrowers to keep their home loan EMIs feasible. Further, housing loan tax benefits allow borrowers to reduce their income tax liability by a significant margin. Tax saving on home loans allows individuals repaying a housing loan to claim tax benefits up to Rs.2 Lakh on the interest paid under Section 24b and up to Rs.1.5 Lakh on the repayment of the principal component of the housing loan under Section 80C. 

Lenders have determined home loan eligibility criteria that homebuyers should be aware of before applying for a loan. This also helps in increasing the chances of getting approved for a home loan easily. In this article, we help readers know the home loan process so that they can navigate through this homeownership journey smoothly.  

Navigating Homeownership: A Step-by-Step Guide to the Home Loan Process


  1. Decide Your Budget: Planning to apply for a home loan? The first thing that you should do is decide your budget. This will help you align your research for a good property. Decide your budget keeping in mind your income, responsibilities and your current debt-to-income ratio. Choose a property the EMI of which will allow you to keep your debt-to-income ratio below 40% as with the debt-to-income ratio exceeding 40%, availing yourself of a home loan can become challenging. 
  2. Carry Out Primary Research: Housing loans are long-tenor loans, with the average tenor being 20 years. With such a long repayment tenor, finding yourself the right lender is important. Reach out to different housing loan lenders and see what they are offering you in terms of home loan interest rates, loan tenor, sanctioned principal amount, processing fees and foreclosure or prepayment penalty. Then, you may use a home loan EMI calculator to compare offers and go with the lender offering you the best home loan deal. 
  3. Apply for a Home Loan: Borrowers, these days, can apply for home loan from the comfort of their own homes. Most lenders host online home loan application processes on their websites. Go to your lender’s website, access the home loan application form, fill it out properly with all the required information and submit the application form after paying the loan processing fee. After this, wait for your lender to revert. 
  4. Submit All the Documents: If your preferred lender agrees to sanction you a loan, they will ask you to submit all the documents. Document requirements will vary depending on whether you are salaried or self-employed. In any case, keep income proof, address proof, identity proof and all property-related documents ready with you. Requirements for income-proof documents vary based on whether you are salaried or self-employed. So, talk to your lender and get clarity on what documents you will need to submit. 
  5. Wait for Document and Property Verification: After you have submitted all the documents, your lender will verify the authenticity of these documents as well as the information provided by you. They will also hire a legal and technical expert to check the property you are planning to invest in. If you pass all the necessary checks, your lender will release the home loan sanction letter. 
  6. Wait for Home Loan Offer Letter: The home loan sanction letter is a document that elaborates on the terms and conditions that your lender wants to extend to you on your home loan. This letter will contain details about the loan amount sanctioned, loan tenor, rate of interest, interest rate type, etc. Once an applicant signs and sends a soft copy of the home loan sanction letter, the lender releases the final home loan offer letter. The applicant may have to visit the lender’s office to sign the home loan offer letter. 
  7. Loan Disbursement: After you have signed the home loan offer letter, your lender will disburse the loan amount and you can go ahead and complete your home purchase. Once the disbursement is done will start the repayment phase. You will repay your home loan in the form of home loan EMIs. During the initial years of loan repayment, the majority portion of your loan EMI will go towards covering interest. Thus, if you plan to prepay or foreclose your loan before the agreed period, make sure to do so during the early years of your loan tenor.

We hope this insightful article will prove helpful and that the information shared here will help you navigate the home loan application process smoothly.

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