Home Loan Sanction Letter

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Lenders approve or reject your home loan application during the sanction stage. The sanction letter of a home loan is proof that the loan application has been approved. This can take about 3 to 4 weeks, depending on your application and the lender’s policies. It is usually valid for about 180 days.

What is a Digital Sanction Letter

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. It is issued by the lender prior to the final agreement. This enables you to download your sanction letter from the comfort of your home or office. Also, having a digital copy, ensures that you can print it as and when you may need it.

What Does a Home Loan Sanction Letter Contain?

A sanction letter states the loan amount sanctioned to you based on your eligibility. This amount is not always the same as the amount requested. It may differ as it is determined by the lender's evaluation of your repayment capacity. Alongside the loan amount, the letter contains the following:

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
Sanction letter validity
Purpose of the loan
Signature
Disbursement stages
Special scheme (if applicable)
Terms and conditions

Benefits of a Home Loan Sanction Letter

Here are the benefits of a 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 buy the home from a developer, the home loan sanction letter is a necessary requirement
It acts as evidence in case of any dispute between the two parties involved

Sample Format of a Home Loan Sanction Letter

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. 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:

Application no:	XXXXXXXXXXXX
Sanctioned Date	DD/MM/YYYY
Applicant Name:	XYZ
Mobile No:	xxxxxxxxxx
Loan Type	Home Loan
Home Loan Sanctioned	₹xxxxxxx
Reference Interest Rate	X% per annum (Interest Type: Floating rate of interest, Periodicity of Interest Application: Monthly)
Floating Interest Rate	Reference rate applicable at the time of disbursement - xx% per annum
Loan Tenure (In years)	xx years
Total Processing Charges	Up to xx% of the total loan amount
Origination Fee (Inclusive of GST)	₹xxxx
Sanction letter validity	xx days from the date of sanction
Amount of EMI (INR)	₹xx,xxx
Property Address	XXXX XXXXX XXXXXXX XXX XXXX
Additional conditions to apply prior to loan disbursal: Repayment from ABC Bank Legal vetting and search to be conducted NOC and offered collateral Confirmation form, official ID and copy of ID

Once you get the letter, ensure that the information listed in this document is accurate.

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What does the home loan sanction letter mean?

A home loan sanction letter is the approval document that is sent before the final agreement. It contains all the details regarding the loan, including the amount approved, interest rate and tenure.

What is the difference between a sanction letter and disbursement letter?

The difference between these documents depends on when the lender issues them. Also, the information they contain may differ. A sanction letter is a document that shows the loan amount you are eligible for. It also consists of other loan terms and conditions. The disbursement letter is issued when the lender disburses the loan amount to your account. It also contains the total loan amount paid by the lender.

What happens after you receive the loan sanction letter?

Once you receive the home loan sanction letter, the lender sends a certified offer letter. It mentions essential details about the loan. After understanding the details, sign an acceptance copy and submit it to the lender.

Can a sanctioned loan be cancelled?

Yes. A home loan sanction letter is not a final loan agreement. Generally, this happens if the lender finds any discrepancy in the documents submitted. If you fail to complete the formalities, the sanctioned loan may be cancelled.

What causes the delay in the sanction of loans?

A delay in the sanction of loans can occur if you fail to submit all the required documents on time. If you provide any incorrect details in the application, the loan sanction may be delayed.

Can I get a home loan sanction letter online?

Yes. You can get a home loan sanction letter online if the lender issues one in digital format.

How do I know if my loan is approved?

If the lender approves your application, you will receive a home loan sanction letter. You can also check the status of your home loan application online on the lender’s official web portal.