What is a sanction letter for a home loan?
A home loan sanction letter is issued after the home loan sanction process by the lender. This letter precedes the final home loan agreement. It is offered only after you submit the required paperwork to verify your identity and address along with property and financial documents. A home loan sanction letter is usually based on your eligibility.
Home loan sanction process
It is smart to calculate your eligibility online before applying for a home loan using a home loan eligibility calculator to get an idea of the amount you can avail. Once you apply and your application has been processed, the lender offers you the terms you may have asked for or something slightly different based on your credit history, income, outstanding debts, and age, among other factors. The lender also considers the current property value along with value appreciation potential.
While you should definitely use a home loan EMI calculator after this to understand the amount to be repaid every month, make sure that you read and understand the sanction letter. Sanction letters will have information about the loan agreement, i.e., the total amount to be sanctioned, the interest rate and base rate on which it has been calculated, whether the rate is fixed or floating, and the tenor of the loan.
These are the details that you can use to work out the EMI to be paid every month using an online calculator. You can then decide whether to go ahead with the loan on the terms proposed by the lender or compare these with other lenders in order to land a better deal. The sanction letter is not the final home loan agreement and does not legally approve the loan. You will undergo other background checks and additional documents will be needed prior to the making of the final agreement. These letters also have a particular validity, which is usually 6 months. Once this period lapses, you will be unable to accept the terms of the loan offer in the sanction letter and will have to apply again. Some real estate developers may require a copy of this letter before your purchase has been finalized.
Once you have read the letter carefully and agree to all the terms and conditions, prepare to submit all the documents that will be required for the next stage of the process. Bajaj Finserv offers a home loan along with pre-approved offers for other credit facilities as well. This helps you save time, and you only must check the offer and share some basic information. Get quick financing on your dream home with Bajaj Finserv.
Also read: Step by step home loan process
Benefits of a digital home loan sanction letter
A digital home loan sanction letter comes with the following benefits.
- Quick access
Once your application for the Bajaj Finserv online home loan is complete, the digital sanction letter is issued within minutes. With immediate availability, you can take a quick glance at the document to check the loan amount sanctioned along with the terms and conditions applicable.
- Lender comparison
A digital sanction letter is only an indicative document with all the terms of the home loan a lender agrees to provide based on your eligibility. Once issued, you can compare these terms against offers from other lenders to make an informed decision.
- Extended validity
Bajaj Housing Finance Limited provides validity of up to 6 months for the sanction letter. You can submit it at any time within this validity to avail the loan amount you are eligible for.
- Serves as a document for house purchase
A digital sanction letter serves as proof of your eligibility to avail the required loan amount for a home purchase. You can thus avail the best deal on your chosen property from your real estate developer with a digital sanction letter in place.
Eligibility criteria for a digital sanction letter
The eligibility criteria for a digital sanction letter are the same as those for a home loan. Fulfill the following e-home loan requirements to receive the digital letter from Bajaj Finserv.
23 years to 62 years for salaried individuals, and 25 years to 70 years for self-employed applicants
At least 3 years of experience for salaried borrowers, and at least 5 years of business continuity for self-employed individuals
750 or higher
Documents required for a sanction letter
Similar to the eligibility criteria, the document requirements to avail a sanction letter are the same as the home loan preconditions. They include:
- KYC documents – any one of your passport, driving license, Aadhaar card, voter ID card
- Your employee ID card
- Salary slips of the last two months
- Bank account statements for the last three months
You may also be asked to submit additional documents before the final loan agreement is provided.
Sanctioned limit in a home loan sanction letter
The sanctioned limit available in a home loan sanction letter varies from one applicant to another. It depends on factors like:
- Market value of the house property to be purchased
- Down payment
- Applicant’s eligibility, which includes income, age, employment status, i.e., salaried or self-employed, outstanding debts, credit history and score
Bajaj Finserv sanctions a substantial loan amount as an e-home loan based on these factors.