Home Loan Sanction Letter

If you plan to purchase a home, you may rely on getting a home loan to make your dreams of being a homeowner come true. Remember, applying for a home loan is a big financial decision and a long-term commitment, which may run into a couple of decades or more. Hence, it is critical that you understand every nuance of the home loan and what’s the process for applying for a Home Loan.

One of the inherent and vital steps in the application process is getting the home loan sanction letter. It is a critical document that the lender sends to you to inform you whether your loan application is approved or rejected. If you are a first-time home loan applicant, and are unsure about sanction letter meaning, then this guide is just for you as we discuss the important aspects of it.

What is a home loan sanction letter?

Home loan sanction letter is a document that you receive from the financial organisation stating your eligibility for the loan amount you have applied for. If you don’t meet the eligibility criteria, the loan rejection letter will inform you about it and state the reason for it. As a home loan applicant, getting the home loan sanction letter is vital for getting the disbursement from the Financial Institution to complete the home-buying process.

The sanction letter is a document of proof that the financial institution has agreed to offer you the loan. It also includes all the important loan-related details and the terms and conditions that you must adhere to throughout the loan tenure or until you repay the full amount.

Also Read – Home Loan Documents

Why is a home loan sanction letter important?

Now that you know what a sanction letter is, it would also help to understand its importance, which is listed below:

• Review and negotiate the terms and conditions
  

  The home loan sanction letter lists the loan terms and conditions for repayment. This gives you a chance to review them and take a decision on whether you want to proceed with availing the loan or look for another Financial Institution that can offer better terms. Additionally, the sanction letter gives you a chance to negotiate with the lender and get the loan with more favourable terms and conditions.

• EMI details
  

  Another significant benefit of a home loan sanction letter is that it allows you to know the exact EMI (equated monthly instalment) that you must pay every month for the sanctioned loan amount, allowing you to plan your finances accordingly and manage the repayment.

• Evidence during legal dispute
  

  If you get embroiled in a legal battle with the financial institution, you can use the home loan sanction letter as evidence about the terms and conditions to underpin your claim.

• Complete the home buying transaction
  

  Nowadays, many real estate companies demand the home loan sanction letter from you , especially, in case of ready-to-move-in properties to ensure that you have the financial means to complete the purchase before they draw up to final property agreement. Thus, the sanction letter comes in handy in finishing the home-buying transaction without any hassles.

Details included in the home loan sanction letter

The details mentioned in a home loan sanction letter may vary from one financial institution to another. However, most of the reputed Financial Institutions in India, like Aditya Birla Housing Finance Limited, include the following details –

• Important details about the borrower, like full name, age, residential address, etc. It also includes details of the lenders – name, address
• The loan amount applied by the borrower, the actual sanctioned loan amount, and other applicable charges like processing fees, late payment penalty, prepayment charges, cheque bounce fees
• The interest rate on the home loan and whether it is a fixed interest rate or a floating interest rate.
• The home loan repayment tenure, i.e., the period within which you need to repay the loan. The sanction letter also specifies the frequency of the EMI payments, the exact EMI amount payable by the borrower and the EMI due date.
• Details of the property mortgaged, i.e., its location, area, address, etc
• The validity of the home loan sanction letter. Generally, the sanction letter is valid for 60 days to 90 days from the date of issuing the letter
• Other terms and conditions that you and the financing institution may have mutually agreed upon, such as getting an insurance cover for the property, etc.

What should you do after receiving the home loan sanction letter?

If you have received a home loan sanction letter, great! But you must know exactly what steps to take to proceed with the application and get the disbursement. Firstly, you must read the terms and conditions and carefully check the loan-related conditions in the letter. Then, if you agree to the terms, you must send your acceptance of the offer to the lender by sending a signed copy of the letter. The lender will then proceed further and prepare for the disbursement of the loan.

Get the best home loan offer from Aditya Birla Housing Finance Limited

Whether you are a first-time applicant or have experience it is advisable to apply for a home loan with a reputed and credible lender like Aditya Birla Housing Finance Limited, one of the leading HFCs (Housing finance companies) in India. They offer the most attractive interest rates, starting from 8.60% per annum. You can get a loan of up to 90% of the property’s value that you want to buy. Simple documentation and quick approval process along with the comfort of doorstep service. You can experience complete control, and transparency with the “Track My Loan” feature you will ensure your Home Loan journey is completely stress-free.