Things to watch out after Home loan approval

POSTED BY Muthu ON February 9, 2012 1:17 pm COMMENTS (22)

Hi, I had applied for a home loan from HDFC Bank for 25 lacs (20 yrs tenure). I got the approval letter from HDFC last week. Paid a processing fee of 11030/- and they have requested for the stamp papers worth of 0.5% of Loan amount (12500 rs) for mortaging.

All said and done, I just want to know what are the things I should take care henceforth so that I dont miss something and get into trouble in the future. Some questions that pops up as such, are

1. I will be surrendering all the original documents (Sale agreement, Sale deed, Construction agreement etc) to HDFC before first disbursement. Will they give any proof that they have collected so and so documents from me or should I request them for one?

2. In the approval letter, they have just mentioned that the interest rate will be 10.5% and the tenure and other stuffs. Though the HDFC agent says that there are no Part payment and preclosure penalties, will HDFC give these to me in writing?

3. What exactly do they print in the Stamp paper which I provide them? (Rs 12500/-)

4. If there is an increase in interest rate, then the bank will raise the EMI (as always). But what if there is a reduction in interest rate? I hope they will be charging some fee to the customer for reduction in interest rate, correct?

5. For repayment, ECS is better (read safer) or PDCs (Post dated cheques)?

Also let me know what other points should I note before taking the first disbursement?

-Muthu

22 replies on this article “Things to watch out after Home loan approval”

  1. Anay says:

    Hi Manish Sir

    I have taken home loan from bank for buying home but now I don’t want to buy that property and my loan amount is disbursed but I didn’t given dd to seller. Now may I cancel home loan?
    Please reply

    1. yes.. you can still cancel it .. because only the cheque is issued .. you can still cancel the cheque .. talk to bank on this.. the agent may try to misguide u on this as his commission is involved .. so take care of that

    2. please check the.amount of penalty u might have to pay on this because of cancellation .. it might be a big amount .. also i assume the sale deed has still not happened

  2. Omkar says:

    HI,

    Once the loan is approved and 85% of the loan amount is disbursed to the builder, I have taken tenure for 15yrs , can i increased it to 20yrs, is that possible now?

    1. Many banks allow it after some time is passed !

  3. Pam says:

    I applied for home loan from a bank. That sanctioned and after signing the loan agreement the bank issue a check in the name of seller. I haven’t yet do registration of the property. Can I cancelled the check as I m not willing to buy the property

    1. If you have not yet given the cheque to the builder, then you can just cancel it. Tell the bank that you dont want to go with the transaction.

  4. Satish says:

    Hi, i have approved home loan for 10L from Indiabulls for an approved project and i requested to Indiabulls to reschedule the agreement(tri party and between Indiabulls and me) sign date due to some reason.But the executive told me that it is not possible and if i delayed it then agreement and loan approval gets cancelled and that may reflects on my CIBIL or there may be some problems will occur when i apply for next time from the same i.e. Indiabulls or some other bank or institutions in the future.I haven’t received any soft or hard copy of sectioned letter and i asked for the same to executive then he told me this will come to you at the timw of agreement signing. I am not cleared at all. Can i cancel the loan sectioned with Indiabulls if yes then how can i and how will take effect for me as well Please help me out.
    Thank you.

    1. I think the agent is just fooling you .

      Yes there is this CIBIL , but it comes into picture only when you take the loan. Right now your loan is just Approved and NOT SANCTIONED. So there will not be any issue . Dont worry

  5. AA says:

    Hi Manish,

    I applied for Home loan with Govt bank but this bank was taking a lot of time so same time applied from Private bank. Private bank has sectioned(approved) the loan.
    I have not been charged any fee till now as i have been provided Waiver on processing fee.

    I have to do payment in 30 days. So i have time to get my loan done from SAME Govt bank. can i cancel the loan and not take the disbursement from Private bank. Will bank charge any amount for Section process.?

    1. Yes, you can surely cancel it from PVT bank. If you have not been charged anything till now , then I dont think there will be any charges, because how will they charge you if you dont agree ?

      1. AA says:

        Thanks Manish.

  6. sudha says:

    I need to know how many days it will take to sanction the loan

  7. dheerajkakwani says:

    My question is related to Home Loan agreement between me and bank.

    I have purchased an apartment, home loan is sanctioned and sale agreement is also been registered by Sub-Registrar between me and builder.

    Now to disburse the loan from Bank, I need to sign an agreement with bank, which I asked that this agreement should also be registered by Sub-Registrar too, but bank is insisting on Notarized agreement including stamp duty.

    As now, all agreements’ index 2 are available online on maharashtra govt websites, so I think its proves more reliability and increases trust factor

    Shall I proceed with Notarized agreement with HDFC ?

    Dheeraj

  8. Atul says:

    Dear Ashal,

    I have home loan sanctioned by HDFC few days back. So far I have not received request for payment from builder. Is there any time duration between loan sanction and first disbursement to happen? Is there possibility that if loan does not get disbursed within certain period then one need to reapply.

    Regards

    Atul

  9. Dear Muthu, you are welcome, please feel free to post your queries in future also.

    Thanks

    Ashal

  10. Joker says:

    Dear BFA and Ashal,

    Your response answered all my queries.. Thanks a lot guys..

    –Muthu

  11. Dear Muthu, I’m trying to answer your queries.

    1. HDFC ‘ll issue a letter to you containing the list of documents submitted by you to HDFC regarding your property. If the said list is not given to you, ask the same. make sure it’s duly stamped & signed by an HDFC official. On your part for your own safety, you may keep true copies (certified by the Notary advocate) of all the documents submitted to HDFC in original by you.

    2. Please read the sanction letter in detail. In case the detailed info regarding the nature of interest rate is not given. please read the loan agreement. In the loan agreement, the type of interest, Fixed or Floating ‘ll be written clearly. Also You ‘ll get the info for the benchmark against which your loan interest rate has been marked up. Yes HDFC is Housing Finance Co. & it’s governed by NHB. As per recent giuidelines issued by NHB, the prepayment charges has been abolished in full. So no prepayment charges at all for you. Yes HDFC ‘ll provide you in writing for no penalty clause if not written in the loan agreement already.

    3. The stamp paper of 0.5% of the loan value demanded from you are meant for mortgage deed. As you are taking loan against your house which is used as a mortgaged asset by you, the mortgage deed ‘ll be prepared & ‘ll be registered in the same office from where your house registration has been done. If you do have taken a car or vehicle loan, you are aware of hypothecation in the registration certificate. This Mortgage deed registration is the same thing. In the record of the govt. (read property registrar office), your property ‘ll be marked as mortgaged to HDFC & till the time, your home loan is not over & HDFC does not come & cancel that mortgaged deed, you can’t registered your house in anybody’s name. So in a sense, it’s a safety for both of you. Without the consent of both of you, this mortgaged deed ‘ll remain active & so do the mortgage marking on the property record.

    4. Normally HDFC ‘ll increase the term if your EMI are able to pay back the loan till the extended term. In case, your EMI is falling short of even extended term, HDFC ‘ll ask you to either prepay a partial amount to adjust remaining loan amount within the loan term or increase the EMi again to pay back the loan within the term. In case the interest rate is reduced, your loan term ‘ll be reduced but the normal EMI ‘ll remain same.

    5. ECS is better than PDCs for safety & other issues already discussed by dear BanyanFA. As you used the word First disbursal, please confirm the status of Pre EMi interest & actual EMI start date. if your cashflow, permits, start your regular EMI from the day one. You ‘ll be able to save a good amount for the interest paid over the term of the loan.

    Thanks

    Ashal

  12. BanyanFA says:

    Hi Muthu,
    The terms of your Loan agreement will mention whether there would be any pre-payment penalty or not. You do not need to talk to your agent. Go to any HDFC office and they shall look into your record and let you know the terms. It is documented in their system. You can even ask them for a printout confirmation.

    ECSs are much safer and efficient than PDCs. Banks would only take a limited number of PDCs. After the PDCs finish, you would have to again provide them further PDCs – which if you don’t, then you shall be liable for not paying the EMIs timely. Hence go for ECS.

    If you Home Loan is of Fixed interest for a few years (generally 2- 5 years), then the bank will not provide you any benefit of lowering of interest ratest. Similarly you shall be protected in case the interest rates go up. However, if your Homeloan is ‘Flexible’ Interest rate product, then you would get the benefit instantly if the bank reduces the interest rates without any charges.

    Irrespective of the fact that HDFC provides or does not provide you a list of documents which they take from you, please keep a photocopy of the entire set of documents you give to HDFC. These documents are manually handled – with which comes the risk of them getting lost. Atleast you should have a copy for your records just in case HDFC fails to provide you these documents. You must alsoo prepare a list of documents which you provide to HDFC on a paper and get it attested by the HDFC Loan officer at the time of submission of the document.

    Keep a record of number of cheques which you are giving to them. It is very easy to forget it after some time and it may be that one of your blank cheque is loitering around in their offices.

    I am not clear about the stamp paper thing you are asking.

    With regards to Part payment – HDFC has a policy that you can pay upto 25% of the principal outstanding amount every year without any charges or Full amount in one go (again without any charges). Please confirm this with the HDFC Officer with whom you are dealing with.

    Regards
    BFA

  13. Vinod Jayachandran says:

    Hi ,
    i faced so many after effects after sanction of home loan from HDFC. I wrote it as part of a blog. You can read my blog from here
    http://vinodjayachandran.wordpress.com/2012/02/07/sbi-home-loanhassles-faced-by-me/

  14. sreejith sivaraman says:

    Answer to question 1 – The bank should give you an attested copy of the title deed and what ever originals submitted by you. Please insist to get it from the bank if they don’t provide.

    1. Sayantan Nag says:

      Now they don’t give me the attested photocopy of the title deed without giving money for that. But from the beginning of my home loan approval they didn’t provide me that. I m an Indian guy, Can you please assist me that in which section or law I insist them to provide me the same.

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