4 Steps of the Home Loan Process: From Pre-Approval to Disbursement

There are four distinct phases of the Home loan process: pre-approval; property finalization; loan processing and disbursement. Here's what you need to know about each step

Get Preapproved

Getting pre-approved for a home loan will help you save time later in the process and, even more importantly, you can be in a stronger position to make a credible offer to a seller. You are required to submit pre-requisite documents (i.e. KYC, income documents, bank statements etc) with bank to initiate your Home Loan application and qualify for Pre-Approved Home Loan.

Start with choosing the right bank since Home loans are long term financial commitment.

Property Finalization

Once you've found the property suiting your requirements, you need to submit all property related documents to the bank for property evaluation (i.e. to verify Legal and Technical aspects of the property)

This is a very important step and you should fully comply with any additional documentation asked by the bank since this process will eventually safeguard the property you intend to purchase. 

In case you’re buying any property which is already under bank’s approved list, things are more easy in terms of property evaluation.

A Pre Property evaluation can be also be requested to ensure that the property is GOOD TO GO before you make any token amount against the property.

Loan Processing

Post Property evaluation, the stamping and registration of the documents needs to be done. Also, if any NOCs are pending, these need to be obtained in the format approved by the bank.

All property related documents (in original) needs to be submitted with bank for final loan processing along with signed sanction letter.

All borrowers need to sign the home loan agreement. You also need to submit post-dated cheques for the first 12 months (if that is the agreed mode of repayment).

Any additional documents/details (as per Sanction Condition, if any) needs to be fulfilled along with above documents.

Lastly, documents (bank statements and payment receipts) to prove that you have paid your down-payment (personal contribution) towards the property is mandatory, since banks normally finance only up to 75-90 per cent of the total cost of the house.

In case you are expecting money from other sources to fund your own contribution, you need to provide sufficient evidence for the same. It is only after submitting this proof that the bank will proceed with disbursement of the loan.

Disbursement

After the bank has ensured that the property is legally and technically clear, all the original documents pertaining to transfer of ownership of property in your favour have been submitted and all the necessary loan agreements have been executed, finally, the approved loan amount would be released by the bank in favour of the Developer/Seller

The cheque will be in the name of the reseller (for resale flats), builder, society or the development authority. It is only in exceptional circumstances, that is, if you provide documents to support that you have made an excess payment from your own account that the cheque will be handed over to you directly by the bank.