Each and every customer need to have some basic knowledge about home loan products and terms before availing a loan as it it easy the process and will benefit the customer in repayment of his EMI's.

1. 10 Steps to peaceful Home loan processing
By
Ram Srikanth

2. Introduction
Building a home of our dream is a life time achievement to a middle class person. For
making this dream come true to a middle class person banks are playing a significant role
by providing them with the right home loans at door steps. But if do not plan properly and
if we are not aware of the policies, terms and conditions of the bank we will end up paying
more to the bank in terms of principal and interest components.
For the convenience of our customers we planned to give a 10 steps plan which the
customer has to understand to take a home loan to build a dream home of their life.
Please read these 10 steps of processing carefully and follow these to make the transaction
a memorable moment in your life.

3. 1. Understand your product
Before going for a home loan processing please be aware of your loan product and the
terms and conditions that the Bank is asking to fulfil to have the loan done. There are
different products for which bank is having different terms and conditions for each
product. Normally the Bank will have the below products which come under home loans.
a. New Purchase of Flat or Independent House: In this a customer can purchase a
New Flat or Independent house of his choice which is under construction or in ready to
occupy position.
b. Resale purchase: This product is applicable to those customers who wants to go for
a Flat or Independent house which was already owned by some body else.
C. Plot + Construction: The product is applicable to those customers who want to buy
a Plot and do the construction immediately, but banks ask you to start the construction
with in the specific period of time.

4. d. Balance Transfer (BT): A person who wants to transfer a loan from one
Bank/Financial Institution to other can opt for this product.
e. Construction: A person who wants to construct a house in his/her plot can go for
this loan.
f. Plot: A customer can go for this loan who wants to purchase a Plot which is under
HUDA, Municipality and Grampanchayat limits.
g. Enhancement: Increasing the loan amount which was already taken from the same
bank is called enhancement.
h. Top – Up: This loan is just a facility that banks provide to customers to take on the
basis of the previous loan and the repayment track.
I. Mortgage: It is the loan that a customer can opt by depositing the original property
documents with the bank which he already owns.

5. 2. Rate of Interest (ROI): The most important point to be taken care of in taking a
home loan. There are two types of interest rates which banks normally have i.e Floating
and Fixed.
Floating Rate of interest is subject to change according to the money market
conditions. If the interest rate increases then the bank will increase the Rata of Interest
on your loan vice versa.
Fixed Rate of Interest is fixed for the complete tenure of for over a period of time
depending on the Banks, but Banks reserve the right to modify the rate of interest if
they is any huge differences in the money market conditions.
Taking clear clarifications is suggestible to the customers about the fixed rate of
interest if it is fixed for the whole tenure or not in spite of any differences in money
market conditions.

6. 3. Tenure or repayment period: A customer can choose the tenure of his own.
Usually banks offer a min and max tenure of 1 to 25 years to home loans, and 1 to 15
years to mortgage loans.
Choose tenure of your own for flexible repayments of your loan by keeping all your
income and liabilities in mind. It is always advised to choose less tenure to save the
interest part on the Home Loan.
4. Eligibility and sanction process: By taking the Fixed and variable income into
consideration banks will calculate the eligibility and the sanction will be given upon all
the verifications being positive which the customer have specified in the application
form. It is suggested to give useful and applicable information only.
Banks reserves the right to sanction or reject the application if they find any
information that you have given is misleading.
Once you receive the sanction letter please read it carefully for the conditions of Interest
rate revisions, Sanction conditions, Pre-closure charges, Processing fees and terms and
conditions of the bank for availing the loan before signing it.

7. 5. Legal documents and scrutiny: The customer is required to submit all the legal
documents to the bank of the property which he is buying. The customer should ask
the vendor to give all the link documents, Lay out, and plan copies along with his/her
ownership documents.
It is to be taken care that if there is any legal disputes on the property then the
proceeding and judgement copies are also required.
The customer should verify the legality of the property with a legal advisor because
after clearing with the process of the bank if any legal issue raises in future the
customer has to pay the loan and the bank do not take any responsibility about the
legality of the property.
It is suggested to verify the legality of those pre approved ventures of the Bank for the
safety purpose.

8. 6. Technical evaluation: Banks evaluate the value of the property with their panel
valuer and the value is final. The customers should take all security measures against
the deviations like Horizontal and vertical which will affect the processing and the
future transactions also. If any deviations are there with the property then you should
ask the vendor for the copies of regularisation. The property should have the necessary
permissions or documents to regularise the deviations according to Building
regularisation scheme (BRS).
Please check all the details like Plot area, sanction area, Plot No and the Municipal
Approved Plan Valid dates before going for a processing.
7. Home Loan Agreement: It is the Agreement which a customer has to sign before
going for disbursement of the loan which he requested to the bank to fund on the
property. Please read the document carefully before signing it as it is a long term
contract between the customer and the Bank. Once you sign the document it can’t be
altered or modified until and unless you repay the loan in all respects.

9. 8. Registration: The most vital part of the Home Loan processing ends with the
registration of the dream property for which you availed the loan. Please take care of
the points typed in the Sale Deed documents which give you the ownership of the
property and any small mistake in that leads to bigger controversies. So please read the
Sale Deed documents before submitting it for the registration process.
The vendee should collect all the link documents, Plan copies and tax Paid receipts from
the vendor at the time of registration only.
9. Processing, pre-payment and foreclosure charges: The customers have to pay
the processing charges to the bank for the loan availed.
Depending on the banks some charge a max of 2% along with service tax for making
part payments towards your home loan account and some do not charge for these
payments, but there is a limit for making these part payments over a financial period.
The customer should know about the additional charges which bank will make in cases
of pre payments and foreclosures. A customer needs to pay a max of 4 % of the
outstanding principle along with service tax towards the foreclosure charges of the loan.

10. 10. Tax exemption: Apart from giving the joy of a own house the home loan gives
Tax exemption on the principal and interest paid over a financial period.
The Customer can get a tax benefit of Rs. 1,00,000/- maximum under section 80C of
Income Tax act 1965. In addition to this you will get tax benefit of Rs. 20,000/-
maximum on the principal amount repaid during a financial year under the section 88
of the principle repayment of the loan.
A customer can claim tax exemption for the amount paid as stamp duty during the
registration process. The Bank will provide you with the provisional certificates to claim
the tax exemption from the income Tax department. The loans which do not have tax
exemptions are top-up, plot and Mortgage loans.
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