A home loan is a type of loan provided by financial institutions or banks to help individuals or families finance the purchase of a residential property. It enables borrowers to fulfill their dream of owning a home by providing them with the necessary funds upfront, which they can repay over an extended period of time.

Here are the steps involved in getting a home loan:

Evaluate your eligibility: Assess your financial readiness and eligibility for a home loan. Factors such as your income, employment stability, credit score, and existing financial commitments will be considered by lenders.

Research and select a lender: Research various banks, housing finance companies, and non-banking financial institutions that offer home loans. Compare their interest rates, loan terms, fees, and customer reviews to find a lender that suits your needs.

Loan application submission: When applying for a home loan, you will typically need to provide various documents to support your application. While the specific requirements may vary depending on the lender and your individual circumstances, here is a general list of documents commonly required for a home loan application:

Proof of Identity: Aadhaar card/ PAN card/ Passport/ Driver's license

Proof of Address: Recent copy of Telephone Bill/ Electricity Bill/Water Bill/ Piped Gas Bill or copy of Passport/ Driver’s License/ Aadhar Card/ Voter id card/ Ration card

Proof of Income:  Income tax returns (ITR) or Form 16 for the last 2 or 3 years, Last 6 months Bank Account Statements, Salary Slip or Salary Certificate of last 3 months, Profit/loss statements or business financial statements if self-employed.

Financial scrutiny & Processing fee: When you apply for a home loan, the lender will conduct a comprehensive financial scrutiny to assess your eligibility for the loan and evaluate your ability to repay it. The key aspects of scrutiny are Income and Cash Flow Analysis, Credit Assessment, Debt-to-Income Ratio, Asset and Liability Evaluation, Compliance and Regulatory Checks etc.

A home loan processing fee is a fee charged by lender to cover the administrative and processing costs involved in evaluating and processing your home loan application. The processing fee can vary from lender to lender and may be a fixed amount which is ranging from Rs. 5,000 to 10,000 or a percentage of the total loan amount normally around 0.25% to 0.50%. It is important to note that the processing fee is separate from other fees such as the application fee, appraisal fee, or legal fee, which may also be charged during the home loan process.

Personal Consultation: Personal consultation in the context of home loans typically refers to a face-to-face meeting between the borrower and the lender or bank representative to discuss your specific financial situation, loan requirements, and explore suitable home loan options. During a personal consultation, the loan officer provides personalised advice and guidance tailored to your needs. This allows you to ask questions, clarify doubts, and receive expert recommendations to make informed decisions regarding your home loan.

Field Investigation: Field investigation in the context of home loans refers to the process conducted by the lender or a designated agency to verify the details provided by the borrower during the loan application. It involves physical verification of place of residence, employment address, employer credentials, work and residence phone numbers and assessment of the property for which the loan is sought, as well as an evaluation of the borrower's creditworthiness and financial stability.

Loan Sanction: The credit appraisal process helps the lender make an informed decision about approving or rejecting a home loan application. It assists in determining the loan amount, interest rate, and repayment terms based on the borrower's creditworthiness and risk profile.

After credit appraisal process loan sanction letter will be issued by lender. A sanction letter can be either unconditional or conditional, depending on the lender's assessment of the borrower's eligibility and the specific terms of the loan. It is important for the borrower to carefully read and understand the terms and conditions mentioned in the sanction letter. Any conditions or requirements mentioned should be fulfilled as per the lender's instructions to ensure a smooth disbursal of the loan amount. Failure to fulfill the specified conditions may lead to delays or even cancellation of the loan disbursement. It is advisable to seek clarification from the lender if there are any doubts regarding the terms and conditions mentioned in the sanction letter.

Loan Offer Letter Issuance: The letter confirms that the home loan application has been approved and specifies the loan amount, interest rate, repayment terms, type of interest rate(i.e. fixed or floating), if floating then the reference rate, rate revising period, tenure, repayment mode, and any other relevant conditions. It also outlines the documents and formalities required from the borrower before the loan disbursement can take place.

Once the borrower receives the offer letter or loan sanction letter from the lender, they are typically required to sign and return an acceptance copy to confirm their agreement with the terms and conditions mentioned in the offer. It is advisable for the borrower to carefully review the interest rate, loan amount and other terms and conditions mentioned in the offer letter before signing and returning the acceptance copy.

Legal scrutiny & Property papers submission: Legal scrutiny in the context of a home loan refers to the process of examining the legal aspects related to the property for which the loan is being sought. This is typically conducted by the lender’s legal team to ensure that the property is free from any legal encumbrances or disputes that could potentially affect the loan or the borrower's ownership of the property. During the legal scrutiny process, various legal documents and records related to the property are reviewed. If any legal issues or concerns are identified during the scrutiny, they may need to be resolved or addressed before the loan can be approved and disbursed.

You will need to submit all the original documents related to the property, including land-related documents, building plan and approvals, certificates from architects and structural designers, and no objection certificates from relevant authorities. However, if you have purchased a property from a reputable builder and it has already been approved, the bank may already have these documents.

Technical scrutiny: Technical scrutiny in the context of a home loan refers to the assessment of the technical aspects of the property for which the loan is being sought. It involves an inspection and evaluation of the property to determine its condition, construction quality, and compliance with building regulations. If the property is under construction, the bank will conduct an assessment to determine the stage of construction and verify if it aligns with the progress mentioned in the payment notice issued by the builder. Additionally, the bank will also verify if the overall area of the property and the layout of the flats comply with the permissions granted by the relevant authorities.

Valuation: Valuation in the context of a home loan refers to the process of determining the fair market value of the property that is being used as collateral for the loan. This valuation is conducted by a professional valuer or appraiser who assesses various factors such as the property's location, size, condition, amenities, comparable sales in the area, and market trends. The purpose of the valuation is to provide an objective estimate of the property's value, which helps the lender assess the risk associated with the loan and determine the loan-to-value ratio (LTV). The LTV is the percentage of the property's value that the lender is willing to finance through the home loan.

Home loan agreement signing: It is the process of officially executing or endorsing the document that outlines the terms and conditions of the loan between the borrower, lender and the builder. If you agree to the repayment mode involving post-dated cheques, you will need to provide cheques for the first 36 months instalments. These cheques will be submitted to the bank, and they will be deposited on the specified dates as per the repayment schedule. The agreement also includes a condition binding the builder to hand over the necessary property documents after registration.

Registration: After obtaining legal clearance, technical scrutiny, valuation, and legal clearance of draft documents, the next step is to register the documents with the Sub Registrar. Borrower needs to pay registration fee and relevant charges.

Disbursement: The disbursement of a home loan typically follows a specific process regulated by the lender and governed by the guidelines of the Reserve Bank of India (RBI). It is common for banks to finance up to 75-80% of the property value as a home loan. Registration charges, stamp duty, and the cost of interior decoration may be considered part of the property value for the purpose of calculating the loan amount. This means that you, as the borrower, are typically required to contribute the remaining 20-25% of the property value from your own funds. This contribution is referred to as the "Margin" in banking terms. Before the disbursement of the loan, you will need to provide documents to prove that you have paid the required margin money.

Home loans can offer various tax benefits to borrowers. Tax provisions allow individuals to claim deductions on the principal repayment and interest paid on their home loans. Here are some common tax benefits associated with home loans:

Deduction on Home Loan Interest:

Under Section 24(b) of the Income Tax Act, 1961, borrowers can claim a deduction on the interest paid on a home loan. The maximum deduction allowed is up to ₹2 lakh per year. It is applicable for both rental and self-occupied housing property.

Deduction on Principal Repayment:

Under Section 80C of the Income Tax Act, borrowers can claim a deduction on the principal repayment of a home loan. The maximum deduction allowed under this section is up to ₹1.5 lakh per year, subject to certain conditions.

Tax Benefits on Stamp Duty and Registration Charges:

Starting from the financial year 2021-2022, borrowers can claim a deduction on the amount paid as stamp duty and registration charges under Section 80C. The maximum deduction allowed is up to ₹1.5 lakh, subject to certain conditions.

RERA (Real Estate Regulatory Authority) was enacted to regulate the real estate sector, protect the interests of homebuyers, and promote transparency and accountability in the industry. Once a property is registered under RERA, certain details and documents related to the project are made available in the public domain.

Here are some key aspects of RERA compliance:

Registration:

As per RERA, real estate developers and builders are required to register their projects with the respective state's Real Estate Regulatory Authority.

Project Disclosure:

Developers are obligated to provide comprehensive information about the project like approvals, layout plans, amenities, specifications, timeline for completion, and status of the project etc.

Adherence to Project Timelines:

RERA mandates that developers adhere to the declared timelines for project completion. If there are any delays, the developer is required to compensate homebuyers.

Escrow Account:

Developers are required to deposit a certain percentage of funds collected from homebuyers into a separate escrow account. This ensures that the funds are utilised only for the specific project's construction and prevents diversion of funds to other projects.

Carpet Area and Unit Specification:

RERA defines the carpet area, which is the net usable floor area of an apartment. Developers must disclose the carpet area of each unit, ensuring transparency in property size calculations.

Structural Defect Liability:

RERA imposes a liability on developers for any structural defects or deficiencies in the construction for a specified period after possession. Developers are required to rectify such defects at their expense.

Grievance Redressal:

RERA provides a mechanism for addressing grievances and disputes between homebuyers and developers. Each state has a dedicated Real Estate Regulatory Authority that oversees complaint registration and resolution processes.