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A millennial house seeker has to undergo many complex processes while buying a house. Someone wishing to apply for a home loan must understand a few things. You must understand the application process, loan sanction, and disbursal process.
Welcome to this post, where you will discover details on the loan sanction process. You can also read to learn about its importance and steps to follow.
Want to understand the loan sanction letter and its importance? A loan sanction letter gives the borrower official confirmation. It indicates that the lender has approved the loan.
The following are the reasons why a loan sanction letter is important:
The house seeker can use the loan sanction letter to find out the loan amount a lender may offer. This letter highlights your financial status.
With a sanction letter, a borrower can prepare for their loan repayment. This letter indicates the total amount of approved loans, interest rates, and repayment periods. A prospective house owner can get all the terms and conditions mentioned in this letter.
A borrower can get a loan from the lender seamlessly. Since the sanction letter gives the specific term of your loan, you won't have any misconceptions when considering the amount or eligibility. It offers transparency between the borrower and lender.
With a sanction letter, you can understand the terms and conditions of the loan process. So, it ensures the process is seamless for both borrowers and lenders.
A personal loan sanction document might differ from one lender to another. However, the letter will include these things:
Your lender may consider the validity of your sanction letter and the circumstances under which it might get cancelled. In addition, it may include details of the loan application process.
So, you have learned the meaning of a home loan sanction letter and its importance. Now, here are the steps involved in a home loan sanction process:
Firstly, you must go to your lender's official website. There, you need to apply for a home loan. You must choose the option and fill out the form. The loan application form needs to include your details and other information based on your income, employment, tenure of loan, loan amount, etc.
Ensure that you double-check the details you include before submitting them. Your loan eligibility is determined based on the documents. You need to give your phone number where the OTP will be sent. You must enter the number to follow the second step.
If you proceed with the online process, your eligibility will be assessed based on the details you provide. You might check for the maximum loan amount. Note that you need to pay monthly EMIs depending on these parameters:
Here, you will get an option to include a co-applicant. This will improve your loan eligibility. You might need to fill out a form separately once you add the name of a co-applicant.
The lender may ask for login charges online for provisional approval. Your login charge consists of your credit charges and processing fee. The provisional approval for the loan sanction letter is sent via email.
Now, the lender may ask you to upload your documents. You may need the following documents:
After you upload your documents, your lender initiates the process. If everything goes according to the process, your loan gets approved. You will then receive the loan sanction letter. The letter includes details like the following:
If you accept all the terms and conditions, sign and resend those documents to your lender. After the lender receives the signed documents, your lender might ask for these documents:
As soon as the process is complete, your lender verifies them and ensures everything goes according to the process.
The last step involves your lender disbursing the loan amount via a cheque or demand draft. According to mutual agreement, your disbursal might occur in certain parts of the amount or a lump sum.
Suppose a lender evaluates your financial status and offers an approval letter with a loan guarantee. This process is the in-principle approval. Lenders might provide such a letter for a pre-approved housing loan. They may charge a specific fee as per the processing charges.
Here, the validity might range between three and six months. On the contrary, a disbursement letter includes the loan amount the lender pays. It might include details, considering the loan insurance amount.
However, a home loan sanction letter is one such document that indicates a house seeker's eligibility for a loan amount. The terms included in the letter remain valid till the specified date mentioned in the letter. A lender or lending company might offer or change the terms based on your loan eligibility. It might not be considered a legal process to apply for a loan.
However, after the letter gets accepted by an applicant, the lender may check the real estate papers submitted by the applicant. A lender keeps those documents until the applicant repays the amount.
Once you receive the loan sanction document, the lender or bank sends the certified offer, including the details. The applicant must sign and submit each document to the lending institute or bank.
Amidst the digital revolution in the property market, the online housing loan application process is seamless. Various lending companies and banks have offered a digital process for applicants to apply for loans online. You can get a digital housing loan sanction letter to assess the application status.
Finally, one should remember that a home loan sanction is a significant document. However, it's not the final loan approval letter before the amount gets legally approved. An applicant must undergo various verification levels and background screening before the final loan agreement gets drafted.
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Unifinz Capital India Limited is a Non Banking Finance Company (NBFC) registered with the Reserve Bank of India (RBI). lendingplate is the brand name under which the company conducts its lending operations and specialises in meeting customer’s instant financial needs.
