If you are eligible to take out a home loan, you will receive a proof of it in the form of a home loan sanction letter. It does not mean that the loan has been disbursed to you yet – it only proves your eligibility for it. Until the loan has been disbursed, this document should be kept safely.
What Does Home Loan Sanction Letter Look Like?
A home loan sanction letter lists out some key information about your loan. It includes:
- The lender expressing its willingness to disburse the loan
- The total amount of the loan
- The total tenure for repayment
- Interest applicable per annum
- The type of interest applicable – fixed or floating
- The base rate for the calculation of interest
- Period of validity of the letter itself, usually about 6 months
- EMI and pre-EMI amounts, if required
- Any additional terms and conditions that you need to agree upon before the loan is disbursed
What Documents are Required For The Sanction Letter To Be Approved?
Before issuing the sanction letter, your lender will require the following documents to be submitted:
- Passport-size photograph
- Identity proof, such as PAN card, passport, or Aadhar card
- Proof of residence, such as Leave and License Agreement or a company letter
- 3 months of salary certificates
- 6 months of bank statements (must be the latest 6 months)
- Latest income tax return form
- Processing fees
- Other financial details like a fixed deposit, recurring deposits, shares, mutual funds, etc.
- Property documents
These documents help the bank to verify that the applicant is eligible for the loan.
Additional Read: Find Out How to Increase Home Loan Eligibility Effectively
Why is a Sanction Letter Important?
Before a loan is disbursed, a sanction letter is the only proof of your eligibility for it. The information contained in a sanction letter, such as the total loan amount or the interest rate, also allows you to calculate the approximate EMI to be paid every month. You can then either reconsider or confirm your decision based on your financial situation.
After a sanction letter is issued, you will be issued a formal letter of offer cum acceptance to the applicant to the loan. Further documents will then need to be submitted and the loan agreement will have to be signed before the loan amount is disbursed. You need to submit these additional documents before the validity of the sanction letter is over, otherwise, they will not be considered valid and you would have to apply for a sanction all over again.
Additional Read: Buying a House? Make Sure to Follow this Home Buying Guide!
With Tata Capital, you do not need to worry about harsh eligibility criteria for your housing loan. Tata Capital housing finance has the most flexible home loan eligibility criteria and repayment methods. Our home loan interest rates start at an affordable 9.25%. With loan amounts up to Rs. 5 crores on a Tata Capital home loan, you no longer have to wait to buy the house of your dreams!