Home loans allow buyers to maintain liquidity and avoid feeling financially drained. Low home loan interest rates make home loan EMIs affordable and easy to repay. Further, the home loan tax benefits allow taxpayers to save significantly on their tax liability. Thus, opting for housing finance is a smart way to buy a home.
If you are planning to apply for housing finance, you must read extensively about the home loan process and the documents required for home loan. This will help you navigate the application process smoothly and secure the loan easily, on terms that will benefit you over the lender. The home loan application process is fairly simple, with most lenders offering an online home loan application facility these days. Lenders generally ask home loan applicants to submit income, identity, age, and all property documents. Improper documentation can lead to immediate home loan application rejection.
Home loan applicants also often get confused between the home loan sanction letter and the home loan offer letter. It is important to know the difference between the two. While the home loan sanction letter is a letter that signifies a lender’s intent to grant you a loan and the terms and conditions on which such a loan may be granted, the home loan offer letter is a legally binding document that serves as proof that the lender you applied to has agreed to sanction you a loan. The home loan offer letter also contains all the details related to the final home loan offer, including the home loan amount sanctioned, the rate of the interest at which the lender will sanction you this amount, the number of years you will have to return the loan amount, the interest rate type charged on the loan, etc.
A home loan sanction letter is released before the home loan offer letter and it implies the lender’s intent to have you onboard as a client. If you have received this document, here’s what you must check for in it.
To start with, the home loan sanction letter must clearly state your name and address. It must also clearly state the home loan amount that the lender is willing to sanction you along with the number of years you will be given to repay the loan or the home loan repayment tenor. The home loan sanction letter must also mention the home loan interest rate at which your lender will be willing to sanction you a loan and the period for which the home loan sanction letter will be valid. Most borrowers do not know that this document has an expiry date and that one must secure the loan before the home loan sanction letter expires. Lastly, make sure to check the document for EMI details as well as other important things.
Once you have the home loan sanction letter in hand and you agree with all the terms and conditions mentioned, sign the letter and send it back to your lender to signal them to proceed with creating the final home loan offer letter. Please know that the details stated in the home loan offer letter are not final and that loan borrowers can negotiate with their lenders if they find certain details unacceptable.
To conclude, receiving the home loan sanction letter is an important step in the home loan application process and one must read this document carefully before signing. Borrowers can even consider hiring professional help to understand the stipulations mentioned in the home loan offer letter if the use of jargon is persistent, but one must never sign the home loan offer letter without fully understanding everything mentioned in it.
