A home-loan approval is welcome news, but the amount sanctioned is only one part of the decision. The loan documents determine how much you actually receive, how your instalments change, what happens during construction and which charges apply if a payment is late. Read the sanction letter and the lender’s Key Facts Statement together, and compare them with the property’s payment schedule. Do not sign because a sales adviser says that every bank uses identical terms.
## Compare sanctioned amount with the property cost sheet Start with the property’s agreement value, statutory duties, registration charges, eligible insurance and any other separately payable items. Identify what the lender will finance and what you must pay from savings. A high sanctioned amount may still be conditional on property valuation, legal clearance, margin contribution and technical progress. Obtain the full list of conditions precedent to disbursement. Avoid counting an unapproved subsidy, bonus or hypothetical rent payment as available cash.
## Verify interest, benchmark and reset terms Read whether the interest rate is fixed, floating or hybrid, and identify the benchmark, spread, reset frequency and conditions that allow a change. Ask for a written illustration showing what happens if the applicable rate rises or falls. Compare equivalent offers on effective borrowing cost and risk, not simply the lowest advertised starting percentage. A teaser or promotional rate may apply only during an introductory period. Clarify whether the lender changes EMI, tenure or both after a reset.
## Use the RBI Key Facts Statement RBI’s standardised Key Facts Statement requirements for retail term loans help borrowers understand key terms before agreeing. Ask for the KFS with the annual percentage rate (APR), applicable fees and relevant repayment illustration. Review processing, legal and valuation charges, payment-return charges, potential penal charges and conditions for cancellation. Read optional service or insurance terms separately; a product described as 'included' should still have clear premiums and consent requirements. Keep dated copies of the documents supplied before execution.
## Check the repayment and prepayment clauses Confirm the first EMI date, loan tenure, instalment amount or method, any pre-EMI during construction and the interest charged on actual disbursements. Examine the applicable prepayment and foreclosure terms for your lender and loan type, because regulatory directions have specific scopes and effective dates. Do not assume every fee is automatically prohibited. Check late-payment consequences, security creation, document retention, title-deed release arrangements after closure and grievance contact information.
## Under-construction flats need extra attention Link the builder’s milestone schedule with bank disbursement triggers. Ask whether the bank independently inspects progress, whether demand notices need certification and how a construction delay changes pre-EMI and total borrowing cost. A developer’s assurance of 'no EMI until possession' may depend on a separate subvention arrangement; require clear contractual documentation and assess the risk of missed payments. For resale, confirm seller loan closure, lien release and coordination of registration and disbursement.
