Ram's Review

Now - a - days, housing loan is a very essential thing which almost stays in the top of the check lists while planning for purchasing a sweet dream home. It is also became a very easy process to avail a housing loan with banks. This article will give its readers a gist of the process involved in availing a housing loan.

A person who wants to apply for a housing loan (from now onwards may called as “Applicant”) needs to contact the bank which he/she prefers to avail a housing loan. Now almost all the banks are availing housing loan. So it is the applicant’s option/ choice to select the bank. Possibly one should check out the interest rate of the banks for the amount. Not all banks avail same interest rate. Few banks avail 11% and few banks go till 16 % of interest for the amount. So it is always advisable for the applicant to choose a bank (especially a Nationalised Bank) which offers less interest rate.


Usually Banks ask for Guarantor to the applicant for the loan amount. It may be any one who is close or well known to the applicant. The applicant may have a co – applicant and a Guarantor for the loan. The banks will be expecting a proof for his residence, for his job (if an employee, a certificate/ Identity Card from the employer and for a business person, the registration certificate of his business) and for his income (Possibly IT returns will do for it). The bankers will be asking for at least 3 years of Income Tax Returns for the applicant. Then the most important one is the sale deed of the property for which loan is applied. In many cases, the applicant will pay and make a sale deed only after sanctioning of the loan, so an agreement with the vendor from whom the property is being purchased is more than enough. In case of a Flat, an agreement from the builder will do.

Once the applicant has submitted these documents to the bank, the process of sanctioning of loan will be initiated by the bank. The bank will offer 3 stages of verification for sanctioning of loan. First stage will be a preliminary verification by the bank with the applicant. Then due diligence verification will be carried out by the bank. Some times, the due diligence verification may be outsourced to private agencies by the bank who will give the report to the bank after verifying the details/ documents submitted by the applicant to the bank. They will verify the residence, work place, property site and Income tax returns of the applicant. Then the final stage will be Valuation. This will be carried out by approved valuers. They will value the property of the applicant and the report will be sent to the bank.

Now it is left to the bank to decide whether loan may be sanctioned or not. The due diligence report will be considered as support for the decision. If may be sanctioned, then the amount of the loan will be decided with the base of report submitted by the valuers.

Then the applicant will be let known by the bank and if the applicant is interested to take the loan for the bank, then he/ she must pay a processing fee. This fee is charged for all the cost effect of different stages of processing one’s loan. Then the loan amount will be credited in the account of the Applicant.

In case if the applicant is not paying the dues of loan properly, then what happens….
Let me discuss this topic in the next article.