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Sanction Letter

Loan Sanction Letter

Last Updated 28th Jul 2021

  • A home loan sanction letter is an initial approval letter to a home loan applicant, that is signed by a person of authority.
  • A sanction letter for home loan 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.
  • Get sanction letter on home loan from top banks and housing finance companies like SBI, HDFC, ICICI Bank, Citibank and PNB Housing Finance.
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What is a Home Loan Sanction Letter?

Home sanction letter is a letter which indicates that a home loan application has been successful. A sanctioned home loan means a loan is approved. The sanction letter is issued after verification of details like credit history, income stability, repayment ability and documents. A home loan sanction letter is signed by a person of authority issued in favour of the home loan applicant. Also, 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.

Availing of 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. 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.

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:

  • To get a home loan sanction, firstly, you need to submit a home loan application.The home loan application can be submitted both online and offline.
  • After you make the loan application, the lender verifies your information. These includes your 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.
  • After the complete verification of your information is done, you are either 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 you about your home loan eligibility. However, a sanction letter for home loan 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 you needs to be fulfill.

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 to be 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 for the following activities -

  • A home loan statement helps you to keep a regular check on their home loan activities.You can know about your 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.

Documents Required for Sanction Letter

You need to submit the following documents to get a home loan sanction letter:-

  • Identity proof- Aadhaar card, PAN Card, Driving License, Voter ID card, Passport
  • Address Proof- Aadhaar card, PAN Card, Last three months utility bill
  • Income proof- Salary slip, ITR or Form 16 (if applicable)


What is the loan sanction letter?

A loan sanction letter of a home loan is a letter of approval issued by the lender to you to indicate that your 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, you need to fulfil 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 you 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, you need to fulfil the lender specific formalities. On successful completion of the loan formalities, the loan amount is disbursed. Further, you can check your home loan status on the lender's online portal and can know when the loan is approved.

What happens after a home loan sanction letter?

Once you receive a home loan sanction letter you will receive a confirmation letter which is a proof that you are eligible for home loan. This document is valid for 6 months.

How long does a home loan sanction take?

Home loan sanction can take somewhere between 3-4 weeks, if all the documents submitted are as per the requirement. If documents are not submitted on time then it may take more time.

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