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Find the home you are planning to purchase

Once you have decided on the type of home you are going to purchase start shopping around for home loans. Don’t make any down payments to the builder/home-owner until you have approval for a home loan. If you must make a down-payment make you sure get an assurance in writing that if your home loan application is denied, you will receive a full refund of your down-payment.

Figure out how much loan you will need and can afford

Use online home-loan calculators to estimate the Estimated Monthly Installments (EMI) for the loan amount you need. Sit down with your family to determine if this is something you can afford. You will also need to understand the difference between Fixed-rate, floating-rate and hybrid loans to determine the rate type that is best suited for you. Most banks in India offer a fixed-rate loan where the rate is fixed for a period of 3-5 years. Remember in times of rising inflation interest rates will continue to go upwards. So it might be a better idea to choose a fixed-rate loan in such an environment.

Shop online to get rate quotes from various banks. Several online sites will provide you estimated rates for home loans. While the actual rate will vary based on your age, income and credit profile, this exercise will give you estimated rates for planning purposes.

Contact a couple of banks and meet with a loan counselor or advisor. Let them know about the property you are interested in and find out if the bank has already financed any loans with the builder. Alternatively you can talk to the builder and get recommendations for banks that are willing to finance their project/venture. Ask the bank to get all the necessary paperwork from the builder (or homeowner) to verify that they are willing to finance the property. Do not pay any processing fees to the bank as most of the banks do not refund your processing fees if your loan is rejected. Ideally you should look for a bank that does not charge a processing fee until pre-approval is complete.

Get all the terms and conditions upfront. Before applying with any bank, make sure you ask for all the terms and conditions so that you can review them. Also check to make sure you have favorable pre-payment conditions, in case you plan to pay back the loan before its full maturity. Please keep in mind that most terms and conditions are negotiable including the interest rate.

Ask the lender for home insurance requirements and get a quote for a home insurance. Factor the home insurance into your monthly costs for planning purposes.

Get the property valued by the bank. Some banks will reject your loan application and forfeit your processing fee if your property is valued at less than your requested loan. Make sure that the bank is satisfied with property value (especially for a used house) before paying the processing fees.

Decide on the type of loan and the bank you want to deal with. Once you’ve decided on the type of loan you want and have found the bank offering you the best terms and conditions ask them to pre-approve you before paying any processing fees.

Signing the paperwork for the loan. Take the terms and conditions and the contractual paperwork home to review them. You might also consider consulting with an attorney specializing in real estate to give you advice. Make sure you fill out paperwork truthfully and accurately. Also make sure that you don’t sign any blank pages and you cross out any blank sections on any forms. Once the paperwork is signed you should take home copies of all signed documents.