Home Loan Sanction Letter

A home loan application gets approved or rejected during the sanction stage. The lender gives a home loan sanction letter only after checking the eligibility and verifying the documents submitted by the applicant.

The sanction letter of a home loan is thus, a proof that the loan application has been approved.

In the age of digitalisation, the home loan application process has become simpler. A digital sanction letter is a digital copy of the physical sanction letter the lender issues prior to the final agreement. Many top financial institutions offer a hassle-free application process and issuing of the sanction letter.

A sanction letter implies that the lender has approved your home loan application. The letter contains the following with all the terms and conditions related to your loan:

• Principal amount

• Applicable rate of interest (floating or fixed) 

• Loan tenure

• The base rate for interest calculation

• Loan repayment mode 

• Loan processing fees

• Details of EMI/ pre-EMI payment

• Tax benefits

• Home loan sanction letter validity

• Special scheme (if applicable)

Approval time for home loans varies across lenders. While some take three to four weeks to sanction the application, some take only 10 to 15 days to complete the loan procedure. In some cases, there may be a delay due to insufficient or missing information or documents.

When you apply for a home loan, there are a few checks that the lender runs. One of them is regarding the financial details, where the lender will verify the documents you submit. If there is any collateral involved, the lender will also evaluate its value. 

Along with all these, the lender will assess your credit score or creditworthiness. If everything is satisfactory, the lender will issue the housing loan sanction letter.

Here are the benefits of a digital home loan sanction letter you can enjoy:

• It proves your eligibility to receive the sanctioned loan amount

• It gives a clear idea about the home loan details, including the EMI you have to pay 

• If you purchase the home from a developer or a housing society, the home loan sanction letter is a necessary requirement

• It acts as evidence in case of any dispute between the two parties involved, since it has the terms and conditions

A home loan sanction letter can vary from lender to lender. Here is the general format of the letter:

Date: DD/MM/YYYY

Dear XYZ,

Thank you for choosing ABC Bank. Based on the application and information provided therein, we are pleased to extend an offer to you for a loan as per the preliminary terms and conditions mentioned below:

As mentioned, the home loan sanction letter is a document you receive once the lender approves your application. Given that a home loan is a major undertaking with a long-term commitment, ensure that the information listed in this document is accurate.