Pre-approved home loan meansa pre-sanction given to the prospective home buyers even before they zero in on any property. Pre-approved home loans are given to the potential buyers based on their income, creditworthiness and financial position.
So, what is the process of getting a pre-approved home loan?
- To get a pre-approved loan, the buyers need to write an application to the bank. Few banks allow you to get it done online as well. Along with the application, the buyer requires to submit a few documents pertaining to his annual salary, current residence, employment status, marital status, etc.
- Banks will then verify the repayment capacity of the burrower basis on the documents submitted by the applicant. Along with the repayment capacity of the lender, banks will also verify the credit score of the applicant.
- After the verifications process is done, the banks will issue a sanction letter with the loan amount and the interest rate that will be applicable on the loan amount. This sanction letter is valid for a specific period beyond which the interest rates or the loan amount both may change.
- The banks will charge a processing fee for issuing of pre-approved home loan, which is not refundable but will be adjusted in case the buyer avails the loan within the specified time.
- For availing the loan, the buyers must identify a property before the expiry date of the sanction letter. The loan will be disbursed after the property documents are submitted, and the verification of the property is done.
Benefits of having pre-approved loans
Loan disbursal process becomes easy and fastAs the major verification is done during the processing of the pre-approval stage, the disbursal of the loan becomes very easy and fast. The only process left is the property document verification, post which the loan is disbursed.
Search for the property becomes easyWhen you have a pre-approved loan, you are aware of your budget. Knowing your budget eases your search by limiting it within the budget.
Better negotiationA pre-approval loan helps you to negotiate with your builders. With a sanction letter in hand, the lenders give you more importance as they understand that you are more serious for the purchase.
Planning your finances becomes easyWith a pre-approved loan, you can easily know your financial standing. You can plan your savings and give a higher down payment to bring down your loan limit and your monthly EMIs.
Pre-approved loan always gives you a head start before applying for a home loan, but this does not guarantee the disbursal of loan. The final loan disbursement depends upon the property documents, due diligence and the builder’s reputation. Failing to meet any of the guidelines can still lead to the cancellation of the home loan. You can also check your eligibility with a pre-approved home loan calculator.
Learn more about your home loan eligibility here.
The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.
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