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Know About Your Home Loan Sanction Letter

Home Loan Sanction Letter Mudrahome

When applying for home loan, your lender – the Bank or NBFCs will need you to provide proof related to your identification, financials and property. Since home loans are usually of a substantial amount and usually longer tenure, it is important that everything is in order for both you and your lender. Before the final loan agreement is confirmed, you will be issued what is known as a ‘Home Loan Sanction Letter’, informing that you have been approved for the loan.

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Important Features of a Sanction letter –

  • Sanction letters are offered based on eligibility
  • They contain specifics about your home loan
  • Sanction letters are not final loan agreements
  • Sanction letters have a fixed validity

Sanction letters are based on your eligibility

Sanction letters are offered by lenders once they have processed your application and decided that you are eligible for a home loan. They may offer you the exact terms you applied for, or adjust the terms according to your eligibility, based on your income, your credit history, outstanding debts you may have at the time of your application and also your age, which gives an estimated idea to the lender whether your income and expenses are slated to increase or decrease. The lenders also take into account the current value of the property that will be mortgaged, along with the potential for its value appreciation.

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Contents of the Sanction letter

The home loan sanction letter will consist details about the loan agreement, specifically the total loan amount being sanctioned, the home loan interest rate that is applicable, as well as the base rate on which it is being calculated, whether the loan plan is a floating or fixed interest rate plan, and the total loan tenure. Based on the terms mentioned in the sanction letter you can use a home loan EMI calculator to check your potential EMIs from our website of You can then decide whether to accept the loan, the mentioned terms, or negotiate with the lender or shop around for a better offer. The sanction letter may also include individual terms that the lender may wish to include, these varies from one lender to another so be sure to go through them carefully.

Sanction letter is not the approval for loan agreement

It is important to remember that a sanction letter does not state legal approval of the loan. The applicant, will still be subject to background checks and will have to provide additional documentation before the final agreement is formalized.

Additional Reading: Sanction Letter & Its Importance

Sanction letter comes with a validity period

It is crucial to know that sanction letters are valid only for a specified time period—often six months, though it depends on the lender. After the approved time period is up, you can not accept the loan offer based on the terms mentioned in the sanction letter. You will then have to again make a new application. You should also be aware that many property developers or buyers ask for a copy of the sanction letter before finalizing a purchase.

So, once you receive your home loan sanction letter go through the contents carefully. Don’t hesitate to talk to your lender or your financial advisor if you need any help in figuring out the details mentioned. Then keep all the documents ready which your lender will ask to take the process forward.

Additional details to remember before applying for a loan –

  • Check whether your EMI and down payments are well within your budget
  • Check the interest rates being offered by different lenders
  • Evaluate different lenders and then decide which terms suits you the best
  • Longer loan tenure means lesser amount but more interest
  • Every lender looks at your credit score first, so having a score about 650 is an advantage

Read the documents and the clauses carefully to avoid any unpleasant surprises later on


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