A mortgage loan is a simple and secured loan. In mortgage loans, we borrow money from a financial institution by pledging any property. A mortgage loan can also be taken to buy or build a new house. The amount of mortgage loan depends on the condition of your property and the loan policy of the lending instution.
Basically mortgage loan is an easy 6-step process that will lead you to your new venture. Here’s all you need to know about the application, processing, and approval of a mortgage loan.
6 Steps of the Mortgage Loan Process
1. The Application
It all begins with an application form. You need to fill out all the details including your personal information, employment details, and property details in this form. This is the property that you will be pledging to the financial institution as collateral for the loan. You need to ensure that these details are accurate since they will go through extensive verification by the lender. Most lenders allow you to easily fill this form online through their portal.
2. Confirm Your Details and Submit Your Documents
Post submitting the initial form, a representative of the lending institution will contact you regarding your query. They will verify your financial background as well as the property details from you. They will check your credit score as well. Based on the verification, they will make you a loan offer. If you approve, you will submit your documents that verify your information. Common documents include your identity proof, address proof, income proof, and property papers which validate your application. Some documents vary from lender to lender. Some lenders may offer a doorstep service where a representative will collect these documents from your home.
3. Await the verification
This representative will take your documents and send them for verification. They will verify your personal income, your credit score, employment, property details, and the market value of the property. All of this will be based on the information you send them through the application form and your documents docket. They might call you for a physical verification or send a representative to do the same. Some lenders may also require you to list a few references who will verify you during the process.
4. You Receive Your Sanction Letter
Once the lender verifies all your documents and information, they will send you an approval letter. This signifies that the lender considers you trustworthy for the loan. A sanction letter will contain the amount of loan you are eligible for as well as the terms and conditions of the loan. At this stage, you must to go through the terms of the loan carefully and calculate your monthly payment using a mortgage loan EMI calculator. Remember, defaulting on your payments can result in the loss of your property and a dipping credit score.
5. Property Evaluation
Once you accept the terms of your loan such as the interest rate, tenure, EMI, etc, your lender will begin a second verification. This second stage of verification evaluates your property papers to eliminate any discrepancies. All your property-related documents go through a stringent legal screening process. The second stage of verification ensures that your property holds the stated market value and is not named under any legal disputes.
6. Receive the Funds
Once the entire verification process is completed and all your information checks-out, the lender begins processing the final disbursement. This stage does not require much time by most lenders. The funds are directly credited to your bank account or are offered to you through cheques. You also receive the credentials to an online account with the lender with which you can easily manage your loan. This account on the lender portal offers you all the details such as EMI payments, balance amount, balance tenure, etc.
A mortgage loan is a quick and easy path to fund you and your family’s dreams.