When you apply for a home loan, the lender examines various aspects such as your credit score, monthly income, existing debt, job stability, etc. for determining your loan eligibility. Post this, if the lender considers you as an eligible home loan applicant, you will receive a proof of it in the form of a home loan sanction letter. Ahead, we have elaborated on the importance of a sanction letter when availing a home loan.

Sanction Letter and its Importance

A sanction letter is a formal letter signed by the lender to notify the home loan applicant that they have been found suitable for the home loan, and the loan amount shall be disbursed subject to fulfilling the remaining formalities as set by them. Therefore, you must make sure that you keep the sanction letter safely with you until the loan amount is disbursed.

Sanction Letter Crucial for Home Loan

The home loan sanction letter will consist of some vital information about your home loan, as mentioned below:

Details Mentioned in the Home Loan Sanction Letter:

  • Total home loan amount
  • Repayment tenure of the home loan
  • Type of interest applicable, i.e. fixed, floating or hybrid
  • Base rate for the calculation of home loan interest rate
  • Equated Monthly Instalment (EMI), and the pre-EMI amount, if required
  • Validity of the sanction letter
  • Terms and conditions set by the lender on the home loan agreement

As mentioned earlier, a sanction letter is only a proof of your home loan eligibility. The loan will be disbursed as per the terms and conditions mentioned in the sanction letter. You will have to provide the below-mentioned documents to your lender in order to receive your home loan sanction letter.

Documents Required for the Sanction Letter

  • Passport-size photograph
  • Identity proof: PAN Card/Passport/ Aadhar Card
  • Proof of residence: Aadhar Card/Driving License/ Voter ID Card
  • 3 months of salary certificates
  • Lat 6 months of bank statements
  • Latest income tax return form
  • Investment details such as fixed deposits, recurring deposits, mutual funds, etc.
  • Property documents

At the time of home loan disbursal, you will need to submit further documents and fulfil other formalities. The loan amount will be disbursed only after all the loan formalities are completed. You will need to carry out all the additional formalities before the validity of the sanction letter is over, otherwise, you will have to apply for a sanction all over again.

Any incorrect information in the sanction letter or failure to submit the required documents can lead to a delay in the disbursement of the home loan. Therefore, you must go through the contents of your home loan sanction letter carefully, and in case of any discrepancy, make sure to raise it with the lender at the earliest. The format of the sanction letter may vary from one lender to another, however, the details mentioned would be the same.