Home Loan Sanction Letter- Meaning, Process, Contents
Buying yourself and your family a new home is probably one of the heavenly experiences. However, with the increasing prices of properties, it is difficult to buy a home with all your savings. So, a home loan is a more convenient and affordable option for this. Having a home loan is not an easy job, especially when you have to go through paperwork, make sure that you are eligible enough, and submit your legal documents. Out of all the documents, a home loan sanction letter is one of the most important ones.
A home loan sanction letter is a piece of document in your pile that you get from your lender after your loan is approved. It is imperative to have this document with you while getting the loan agreement letter. You must have this document throughout the loan tenure and post that for future reference.
Keep scrolling through this article to know more about the home loan sanction letter. In this article, you will know about the home loan sanction letter, its features, the process of getting it, and some important facts related to it.
What is a Home Loan Sanction Letter and What is its Significance?
A home loan sanction letter is a piece of document that you get from your lender after the loan is sanctioned. It carries the consent of the lender and therefore shows that you are eligible for the loan and have been verified by your lender. After you get permission from the lender through a home loan sanction letter, you can further move to the process of claiming the disbursal of the loan amount.
A home loan sanction letter is also the document that shows that you and your lender have mutually agreed to the terms and conditions of the home loan. After you submit all your legal documents including your application form to the lender, the lender verifies them all and gives you the sanction letter.
Besides that, this letter consists of other important information, features, and conditions regarding the home loan. You will get to know about all of that in the coming section of the article.
What are the Contents of a Home Loan Sanction Letter?
A home loan sanction letter consists of the following information regarding the home loan:
- Loan Amount and Loan Tenure:
A home loan sanction letter consists of the loan amount you have applied for. It also contains the tenure of repayment within which you are bound to repay the loan to the lender.
- Interest rate:
A sanction letter of a home loan also has the type of interest rate that has been applied to the loan. It might be either a floating rate of interest or a fixed rate of interest, whichever you opted for. It also mentions the rate of interest that the lender has charged you and the base rate at which the rate of interest is to be calculated.
- EMI details:
A home loan sanction letter also has information regarding the EMI details of the home loan. It shows the pre-EMI and EMI amounts that you have to pay through monthly instalments.
- Validity of the sanction letter:
It also has a validity period until which the loan sanction letter is valid.
- Terms and Conditions:
After all that, in the end, there is a list of the Terms and Conditions of the home loan. These terms and conditions are important as they show that you and the lender have agreed to them.
What is the Process of Getting a Home Loan Sanction Letter?
Now that you have known what a home loan sanction letter is and what it contains, now it is time for you to know the process of getting one. The process is quite similar to getting a home loan.
- Filling out the Application Form:
The first step for you to get a sanction letter for a home loan is to fill out all the details that are given in the application. All your basic details with the documents to prove them are needed while filling out the application form.
- Loan Processing:
After you apply for a sanction letter, you might face doubts regarding filling out the form. In that case, you can reach out to the bank officials through the toll-free number of the bank or go for a chat assistant.
- Verification:
After you fill out the application form and submit all your documents, the lender goes through all the details and verifies them before sanctioning you the letter. These details include your credit history, credit score, income, type of job, etc.
- Loan Approval:
After you are completely verified by the lender, you are approved for the home loan. To show consent in the written form, you are given a home loan sanction letter. You now have to keep this document’s lifetime for future reference.
Summing It Up
As important as it is to have a home loan sanction letter, it is equally important to understand that this letter is not the loan agreement letter. A loan agreement letter states that the lender has agreed upon giving you the loan, which is the final letter before loan the amount is disbursed. A sanction letter for a home loan is often an initial approval from the lender’s side. You have to show this letter while getting the loan amount in your bank account.
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