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Sanction Letter

Loan Sanction Letter

Last Updated 23rd Sep 2020

  • A home loan sanction letter is an initial approval letter to a home loan applicant, that is signed by a person of authority.
  • A home loan sanction letter is issued after the verification of details like credit history, income stability, repayment ability and documents.
  • A home loan sanction letter validity lasts for six months.
  • A bank loan sanction letter format is based on information like sanctioned loan amount, loan tenure, home loan interest rate, and terms and conditions of the lender.
  • Home loan interest rate starts at 6.95%.
  • Get sanction letter on home loan from top banks and housing finance companies like SBI, HDFC, ICICI Bank, Citibank and PNB Housing Finance.

What is a home loan sanction letter?

Availing a home loan is a lengthy process that requires different steps such as research, comparison, application, documents submission and verification, and ultimately loan approval and disbursement. However, one of the essential components of home loan approval and disbursement is the home loan sanction letter. A home loan sanction letter is an approval letter signed by a person of authority issued in favour of the home loan applicant.

The letter indicates that the home loan application has been successful, and on the completion of the required formalities and conditions, the loan will be approved thereafter. Thereby, a home loan sanction letter meaning is the initial indication of a loan approval process. Further, it includes information like total loan amount to be sanctioned by the lender, and the home loan interest rate on which the home loan is lent. A home loan bank sanction letter has a validity of six months.

Home loan Sanction Process

Every loan process is based on some protocols and procedures that need to be followed. Similarly, a home loan sanction also has some process. It is listed as follows:

Step 1: To get a home loan sanction, firstly, a home loan application is to be submitted by a borrower. The home loan application can be submitted both online and offline.

Step 2: After the home loan applicant makes the loan application, the lender verifies the information of the loan applicant. These include the applicant's credit history, income stability, checking and verification of documents, legal checks on the property for which a home loan is applied, and the market value of the mortgaged property, which in this case is the house itself.

Step 3: After the complete verification of the applicant's information is done, the applicant is selected or rejected for a home loan. The initial indication of a home loan process is made through a home loan sanction letter. The letter is issued by a person of authority to inform him or her about their successful home loan eligibility. However, a home loan sanction letter is not the final loan agreement on a home loan disbursement. Indeed, it is just an indication for the beginning of a further loan process that an applicant needs to be fulfilled.

Sanction Letter Format

A home loan sanction letter contains various components of a home loan. A housing loan sanction letter format includes various components like

  • Total loan amount sanctioned.
  • Home loan tenure.
  • Applicable home loan interest rates whether fixed or floating.
  • Benchmark type like base rate, RLLR, MCLR or PLR to which the home loan interest rate is linked.
  • Home loan EMIs to be paid.
  • The validity period of the home loan sanction letter.
  • Terms and conditions of the lender that are applied on the home loan.

A home loan sanction letter sample is as follows:

Sanction Letter Sample

Why are Home Loan Statements required?

A home loan statement can be used to do the following activities -

  • A home loan statement helps home loan borrowers to keep a regular check on their home loan activities. The borrowers can know about their upcoming home loan EMIs, due amount, the amount paid and the remaining loan tenure.
  • Home loan statements are even useful after the completion of a particular loan and it acts as a proof of repayment of the loans. Banks check the home loan statements for lending the credit in future.
  • Home loan statements are also essential to claim tax deductions. You can get the following tax deductions on a home loan:
    • Under Section 80C of the Income Tax Act, you can claim tax deductions upto ₹ 1,50,000 on the principal amount of the home loan.
    • You can get tax deductions up to ₹ 2,00,000 on the interest paid on the home loan under Section 24 of the Income Tax Act.
  • Amount paid on stamp duty, and registration charges of a home loan can also be claimed for tax deductions.


What is the loan sanction letter?

A loan sanction letter of home loan is a letter of approval issued by the lender to the home loan applicant to indicate that his or her eligibility meets the home loan requirements.

How do you sanction a home loan?

A home loan is sanctioned in three steps, which begins with filling the home loan application form, followed by documents and eligibility verification and ends with the allotments of home loan sanction letter.

Can a sanctioned loan be cancelled?

A housing loan sanction letter is not the final loan agreement. Indeed, even after getting the home loan sanction letter, one needs to fulfil the further formalities. Failure to meet these could cancel the sanctioned loan.

How do banks sanction loans?

Banks sanction loans after checking the details mentioned by the applicant on the home loan application form. Further, checking and verification of the documents is done by the banks. It is only after proper verification that a bank allots a sanction letter, which however is not the final loan agreement. A loan is sanctioned after all the loan formalities are fulfilled.

What causes the delay in sanction of loans?

A delay in the sanction of home loans can be caused by incorrect information filled on the application form, or failure to fulfil the documentation requirements of the lender.

How do I know if my loan is approved?

The initial indication of a home loan approval is the allotment of the home loan sanction letter. After receiving the letter, the lender needs to fulfil the lender specific formalities. On successful completion of the loan formalities, the loan amount is disbursed. Further, an applicant can check his or her home loan status on the lender's online portal and can know when the loan is approved.

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    State Bank of India announced the option to choose either a moratorium of up to 24 months or reschedule the instalments and extend the tenure by a period equivalent to the moratorium granted, for its retail customers. ​​​The bank is aiming to assist the customers amid the COVID 19 and economic slowdown.
  • 2020-09-21 : ICICI Bank launches Home Utsav
    ICICI Bank launched Home Utsav, a virtual property exhibition. The scheme will digitally showcase real estate projects by renowned developers from key cities across the country. Individuals will get exclusive benefits of low home loan interest rates, special processing fees, and as well as the digital sanction of loans.
  • 2020-09-21 : HDFC sanctions Rs 47K cr home loans to over 2 lakh homebuyers under govt’s CLSS
    Affordable home loans and loans linked credit subsidy scheme of the government targeted at lower and middle income segments have been growing steadily for HDFC. It has dissbursed more than 47k home loans under the government’s Pradhan Mantri Awas Yojana (PMAY) scheme in the past six months, including five months of lockdown period.
  • 2020-09-21 : ICICI Home Finance launched home loan scheme for skilled workers in Delhi
    ICICI Home Finance launched a new loan scheme ‘Apna Ghar Dreamz’, with credit amount in the range of Rs 2 lakh to 50 lakh, for skilled workers employed in the informal sector in Delhi. The scheme is aiming skilled workers such as carpenters, plumbers, electricians, tailors, painters, welders, auto mechanics, manufacturing machine operators, computer mechanics, RO repair technicians, small and medium business owners and grocery store owners in the city.
  • 2020-09-18 : PSBs overtake private banks in 2020
    Public sector banks overtook private sector banks in offering retail loans like home, personal, gold, car, two-wheeler and education loan along with business and mudra loans. Since December 2019, PSBs overall lending has gone up to 57.7% as of June 2020, which is a jump of as much as 60 bpsover six months. During the same period, the share of private banks in overall lending has come down by 60 bps to 34.4%. The share of total loans outstanding that private banks have lost has been taken over by state-owned lenders.
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