Obtaining a home loan is one of the vital steps in trying to achieve buying your dream home. One of the most critical steps following submission of the application alongside the documents is the issuance of home loan sanction letter. So what is a sanction letter? Why is it relevant? What is it made of? And what came before final loan disbursement. Here at Today Finserv Consulting India, we witness hundreds of home buyers and assist them throughout the complete process of home loan.
What Is A Sanction Letter: Definition
A home loan sanction letter is a loan application is at its initial scrutiny stage. A home loan sanction letter is a document given to a client by the bank or financial body that indicates that they have adequately considered the application and have also approved it in principle. This means that after a set of requirements are fulfilled, the lender is willing to give the client a home loan.
Yet, the disbursal and agreement steps cannot be finalized. Though it comes after the legal and technical verification checks on the property, it is still regarded as a part of a preliminary commitment.
The Significance of a Sanction Letter
In the lending procedure, a sanction letter carries notable significance due to multiple factors.
Guarantee of Loan Sanction: A document that assures the lender has sanctioned the customer’s requested loan amount, his repayment duration, and even interest rate pertaining his account to the profile submitted.
Leverage for Purchase Negotiations: You become more equipped to bargain with builders or property sellers with a newfound freedom proffered by the letter.
Eligibility to Purchase Offers: Builders tend to cater first to those buyers already in possession of a letter than those who are still undergoing the application process.
Here at Today Finserv Consulting India, we put in place mechanisms that make certain our clients comprehend every step of the sanction letter to ensure they can move on the next steps with ease.
When Do You Receive a Sanction Letter?
The sanction letter gets issued after the lender:
✅ Completes verification of your documents and confirms your identity, income, and employment.
✅ Evaluates your credit history, credit score, and overall repayment capacity.
✅ Performs an internal risk assessment based on your profile.
This process takes approximately 5 to 10 working days, depending on the lender and your application’s completeness.
What Does a Sanction Letter Contain?
Below are the major constituents of a home loan sanction letter:
Sanctioned Loan Amount
This is the home loan you have been sanctioned. This will be subject to cap, based on eligibility it can be lower than the amount applied for.
Rate of Interest
The interest to be charged is applicable and stated and will be either fixed, floating, or a mixture of the two. It also contains if it will be affected by a borrower base rate benchmark link like Repo Rate or MCLR.
Loan Tenure
The set repayment duration of the loan ranging from a minimum of 5 years to a maximum of 30 years.
EMI Details
These are estimates of the total monthly payment considering the principal amount, interest rate, and duration of the loan.
Fees and Other Charges
Information regarding a processing fee that has been paid or that is outstanding, together with legal, technical, administrative or other potential charges.
Terms and Conditions
- Final confirmation following the legal and technical property checks
- Supplementary documents to be provided
- Insurance of the said property
- Assignment of the salary account or postdated cheques
Expiry Period of the Sanction Letter
Generally from 30 to 90 days of issue after which it is considered dormant. The letter can only be re approved if you fail to take the prescribed subsequent actions within the stipulated time.
Differences between Sanction Letter and Loan Disbursement Letter
It is imperative to differentiate between a sanction letter and a loan disbursement letter for the reasons stated:
- Letter of Sanction Letter of Disbursement
- Provisional approval Final allowance after thorough examination
- Before property verification after checks Legal & technical checks are executed.
- Sanction contains the terms of the loan alongside estimates of the EMI
- Disbursement Letter contains approximate loan amount to be disbursed
- Commitment supper agreement Legally binding
At Today Finserv, we ensure you navigate these two phases seamlessly so that you are not disoriented or taken aback.
Different Kinds of Letters of Sanction
Pre-sanction letter
This is issued before the a letter of sanction is sent out in order for you to determine how much loan you qualify for prior to selecting the property cuts down time spent on budgeting, negotiating.
Final Sanction Letter
It is given after the property selection and documents submission, it contains all details of terms and conditions of the approved loan.
Common Reasons for Sanction Letter Issuance Rejection / Delay
After application submission, you might face delays. Following are the most common reasons:
- Submission documentation not complete or incorrect
- Credit score below desirable criteria (typically below 650-700)
- Unstable employment history/
- High level of existing debt
- Inconsistency income proof with tax returns documentation
Tip: In case you apply, make sure your documents and credit score are verified. At Today Finserv, we do a pre-check which helps reduce chances of rejection.
What to Do After Sanction Letter Is Received?
Home loan sanction letter receipts, you must:
Examine Terms and Conditions
Check all digits for accuracy on the interest rate, EMI, loan tenure, and loan prepayment clauses. In the event that you come across any discrepancies or disagree with terms, you must first reach out to the lender.
Provide Required Property Documents
As soon as the lender goes through your profile and likes it, the following steps relate to providing all property documents like:
- Sale agreement
- Title deed
- Approved building plan
- Property tax receipts
Schedule Legal & Technical Works Verification
The bank will perform on-site technical verification and a legal due diligence check. It’s in a range of 3 – 7 days.
Sign the Loan Agreement
You’ll sign the rest of the loan agreement after everything checks out, after providing PDCs or ECS mandates for the deduction of EMIs.
Wait For Loan Disbursement
The loan is paid in full or in parts, based on if the property is ready to move in or under construction.
How Today Finserv Consulting India Aids in Sanction Letters?
We are well aware that obtaining a home loan is a lengthy commitment. To this end, our experts work alongside you to:
✅ Verify eligibility before applying
✅ Document preparation and organization
✅ Select the appropriate lender given the profile
✅ Manage the application and troubleshoot
✅ Explanation and examination of the sanction letter
✅ Advise on the steps following sanction
Our assistance on all aspects results in a swift, seamless, and stress-less process of obtaining a home loan.
Conclusion
The fulfilment of the home loan sanction letter constitutes a major milestone in the procedure of home financing. This letter acts as proof of eligibility and takes one closer to owning their dream home. Knowing what it informs, how to interpret its clauses, and what to do after receiving it ensures that you remain in control of the process.
At Today Finserv Consulting India, we strive to simplify, clarify, and add value to your home loan experience. We’re ready to assist our clients throughout the entire process, from first-time applications to loan transfers.
