In todays scenario where cost of everything essential for survival is witnessing a steep upward

movement, dreaming of a home or property has also become a difficult task. You are well versed with the
fact that buying a property or building a house is a matter of extensive research and managing finances
add on to the challenge. However, one thing is certain that once you have decided that you need to have a
place of your own there is no stopping as home loans have made it easier for everyone to accomplish their
dream of buying a home. While you are busy trying to fetch location for your dream home, it is very
important for you to have a crisp idea of the home loan process in India right from approval to
disbursal. Following are steps that will take you through the entire process of home loan in India.

Home Loan Process in India - It goes without saying that prior to laying your hand on one particular
bank or financial institution it is important for you to go through the rates and benefits of home loans that
are being offered by almost all banks and financial institutions. Compare the rates and try to analyze the
best being offered to you before you settle for your lender. Like any other loan, the process of home loan
too begins with the application form.

1. Filling and Filing of Application Form The very first thing you are supposed to do while
looking for a home loan is that of filling and submitting the application form. You may witness a
difference in the format of the application form from bank to bank but more than 80 percent information
that they want you to share remains the same. The application form basically wants you to give away your
professional and personal information, the details of the property (in case you have finalized it), the
estimated cost and your assets and liability details.

2. Documentation - Along with the application form you are also required to present a few
documents. These documents are
Identity proof, Address proof, Income proof
Proof of educational qualifications
Age proof, Employment details, Bank statements

Self Employed Self Employed Non

Documents Salaried
Professional Professional

Application form with

photograph duly signed

Identity, residence and age

proof

Last 6 months bank statements

Last 3 months Salary-slips

Processing fee cheque

Form 16 / Income Tax Returns

 Self Employed Self Employed Non
Documents Salaried
Professional Professional

Proof of business existence

Business profile

Education qualification
certificate and proof of
business existence

Last 3 years Income Tax

Returns with computation of
Income

Last 3 years CA Certified /

Audited Balance Sheet and
Profit & Loss Account

3. Processing Fee While submitting the home loan application form you will also be charged with
a processing fee that varies for different banks and financial institutions. However, processing fee usually
ranges from 0.25 percent to 0.50 percent of the total loan amount. Negotiation on processing fee with the
banks may end up in reduced or minimized rate of processing fee by the bank. This fee is charged by
banks for providing you with services like maintenance of post dated cheques, sending of Income Tax
certificates each year etc.

4. Evaluation of Application and Personal Discussion Once your application is filed, the
bank/institution analyzes your application and then meets up with you for a personal discussion. The
evaluation process takes a time of maximum one day or two. It is advised that when you are called for a
discussion you should carry all the originals of the documents that you have submitted as they may be
called for verification. It is important for you to provide the bank with accurate information especially
your financial details as banks sanction loans only when they are satisfied with your credentials.

5. Investigations by Banks All banks validate the information provided by you by conducting
checks on the residential or official address. The representatives of the banks will visit your residence or
your place of work in order to verify your address and employer credentials. Your telephone lines of work
and home are also verified. Is advisable when the investigation or validation process begins try to be
available at your home or your work place in order to provide with the details they are looking for.

6. Sanction of Loan and Credit Appraisal If the bank gets convinced with your credentials and
the validation process it gives you a green signal and sanctions the loan amount in your name. If not then
your application for loan process gets rejected here. Your credit worthiness is calculated by bank on the
basis of your income, age, employer or firm with whom you work or in case if you are self-employed then
your nature of work, bank statements and CIBIL report and then plans out the maximum loan amount that
 they can offer you. You are then issued a sanction letter by the bank which may be a letter that does not
have any terms or conditions or it may put forth certain terms and conditions that you ought to fulfill
before your loan gets disbursed.

7. Loan Offer Letter The loan offer letter that you will receive thereafter would comprise of the
following
Loan amount
Tenure of the loan
Rate of Interest
Nature of rate of interest that is whether fixed or variable rate of interest linked to a
reference rate.
General and special (if any) terms and conditions of the loan.
Mode of repayment
Once you agree to the above mentioned details you will sign in the acceptance copy that would be kept
with the bank for their record. It is also advisable to negotiate with the bank on the rate of interest. With
the fierce competition and race for meeting periodic targets, banks vie against each other and this may
work in your favor.

8. Property and Paper Work The legal side of the contract will now come to action. The
property becomes the cynosure of banks eyes. Once you are through with the selection part of your
property, banks ask for original documents of your property to be handed over to them. These documents
for a part of banks custody and would serve as security for the bank till the time you repay your home
loan. The property documents usually consist of the following
No Objection Certificates (NOCs) from the legal owners such as cooperative housing
societies, the lessor of the land in the case of leasehold land, statutory development authorities etc. The
role of NOCs does not come into play where the property is situated on freehold land and the entire land
is being transferred along with the structure.
The title documents of your seller
All the documents provided by you would undergo a scrutiny that would be conducted by the lawyer of
the bank. This legal check is done in order to verify the authenticity and validity of the documents
presented by you.

9. Validation and Valuation of Property - Banks visit the site of property before they give a go
ahead to the loan you have applied for. An expert representing the bank goes out to the site of property to
conduct validation and valuation checks. The process of verification of site is done in order to know the
following-

When the property is under construction

Quality of construction
 Checks on layout of flats and the area of property to ensure that it is within permissions granted
by the governing authority.
In order to ensure that the stage of construction is the same as that mentioned in the payment
notice given to you by the builder.
To ensure that the work-in-progress is satisfactory.
To evaluate the property in relation to other deals in the surrounding areas.
To ensure that the builder has the requisite certificates to start construction at the site.

When the property is ready for sale or in case of resale

To calculate the age of the building.
Checks on quality of construction.
Development of the surrounding area.
Check on the maintenance of building both internally and externally.
To know whether the building will last the loan tenure. You loan eligibility depends on this by a
great deal. The loan tenure will be restricted to the maximum age of the property as decided by the bank's
engineer and your loan eligibility would bear its impact.
To know if there is any existing lien or mortgage on the property.
To ensure if the builder has received the requisite certificates for handing over possession of the
flat.
To evaluate the property in relation to other deals in the surrounding areas.
Thus, validation and valuation of property forms a vital part of checks and scrutinies that are made by
banks as substantial amount is involved when it comes to home loan. There are banks who are willing to
do the valuation and validation of property before the sanction is made as this would help you save a good
deal of time in the event when loans get rejected due to flaws that are raised in this step. This would also
help you save on the fees that you ought to pay to banks in order to obtain the sanction.

10. Registration and Signing of Loan Agreement Once you are done with the above process and
your property gets a nod from the bank, the registration, stamping and signing of the loan agreement is
done. Here you would also be asked to pay post dated cheques and have to pay stamp duty which is
applicable at some banks.

11. Disbursement of Your Home Loan Once the loan agreements have been executed, the
disbursement of loan comes in to play. As the banks sanction only 85 percent to 90 percent of the cost of
the house it is important for you to submit the documents revealing that you have given your part of
contribution towards your home. When you go in for a property that is ready for sale or resale then the
loan is disbursed in full but when you opt for a property that is under construction part-disbursement of
loan may be but then again this varies from bank to bank

Section 80C: Tax benefit on Home Loan (Principal Amount)

The amount paid as Repayment of Principal Amount of Home Loan by an Individual/HUF is allowed as
tax deduction under Section 80C of the Income Tax Act. The maximum tax deduction allowed under
Section 80C is Rs. 1,50,000.
This tax deduction is the total of the deduction allowed under Section 80C and includes amount invested
in PPF Account, Tax Saving Fixed Deposits, Equity Oriented Mutual funds, National Savings Certificate,
Senior Citizens Saving Scheme etc.

This tax deduction under Section 80C is available on payment basis irrespective of the year for which the
payment has been made. The Amount paid as Stamp Duty & Registration Fee is also allowed as tax
deduction under Section 80C even if the Assessee has not taken Loan.

However, tax benefit of home loan under this section for repayment of principal part of the home loan is
allowed only after the construction is complete and the completion certificate has been awarded. No
deduction would be allowed under this section for repayment of principal for those years during which
the property was under construction.

Moreover, in case you are planning to buy an under-construction property as it is priced at a lower price
as compared to a fully completed property, you are here also requested to note that Service Tax is also
levied on Under Construction Property & the Finance Minister while announcing the Budget 2013 also
changed the rates of Service Tax on under Construction Property. However, no Service Tax is levied on
properties on which construction has been fully completed.