Understanding how a Home Loan process works is essential. It allows you to be prepared for everything you need for your application well in advance and ensures that your loan process moves forward smoothly. The sanction stage is one of the most crucial steps in the Home Loan application process. At this stage, you know whether your loan application is approved or rejected.
The article will give you a detailed overview of the role of a sanction letter in the process of your Home Loan approval.
The sanction process is quite simple; you only need to submit your loan application form and necessary documents for verification. Once the bank has verified all your documents, the next step is checking your eligibility for the loan applied. Here the bank conducts an inquiry into your credit history and credit score. They also look at the current value of the property and the appreciation value it can offer over time. On being satisfied with the verification and evaluation, the bank issues a Home Loan sanction letter.
The bank will offer the sanction letter depending on your eligibility, creditworthiness as a borrower, and other financial factors. The letter will provide the terms you had asked for or reasonable changes based on your eligibility.
You need a sanction letter for the following reasons:
The sanction letter includes the following information about the loan approval:
Most people confuse a sanction letter be the final loan agreement. However, this is not true. A sanction letter does not mean that your loan is approved. It is simply proof that you are eligible for loan approval. It is not legally binding. You have to undergo further processing for the final loan approval. The final loan agreement will be considered the last word concerning the repayment terms.
On receiving the sanction letter, make sure you go through it point by point. Accept the repayment terms and send a signed copy to the bank if the repayment terms seem reasonable. Several banks now offer a digital sanction letter to make the loan approval process quicker and more convenient. Check if your bank offers the option of a digital sanction letter.
Note: Always remember to accept the sanction letter within its validity period. After the validity period, the bank will not accept your application, and you must apply for a new one.
Did you know your Home Loan also comes with Home Loan stamp duty and registration charges? Click here to read more.
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*Terms and conditions apply. Home Loan at the sole discretion of HDFC Bank limited. Loan disbursal is subject to documentation and verification as per Banks requirement.