As a home buyer when you look forward to buying a house, be it a luxury flat in Thane or in Mumbai, it is not easy to get approval on the home loan. However, with a pre-approved loan, such ambiguity doesn’t exist.
A pre-approved home loan is one of the instruments offered by retail banking segments of most banks. It creates a win-win situation for both, the banker and its customer by eliminating the uncertainties involved in the loan disbursement process. The banks offer their customer hassle-free disbursements of home loans after performing certain primary checks based on various parameters like the credit-worthiness of the customer, replaying capacity, etc.
A prospective homebuyer can easily get a pre-approved home loan. However, there are certain factors that need to be taken into consideration. They are listed below:
∙ Property details of the customer if the deal is fixed
∙ Title information with regards to the property.
∙ Interest rate on the home loan, its tenure and possible penalties.
Once the financial institution gets all the important documents in hand, the loan can be disbursed.
It is important to note that the period for the pre-approval loan is limited. It generally lasts for three to six months, meaning the transaction of the property must be completed in this time frame.
Advantages of a pre-approved home loan
Since now you are clear with the basics of a pre-approved home loan, let’s understand the advantages of a pre-approved home loan. This will offer you a more holistic picture.
One of the most important advantages of a pre-approved home loan is that it acts as a financial planner for you. It further gives you clarity on the amount of loan that can be purposed. Consequently, you will start searching for the property that is well within your budget.
Moreover, since you are applying for a pre-approved home loan, the builder or the real estate developer you are looking forward to buying a property from will take you more seriously. This will give you an edge over the financial proceedings that take place in the property transaction space.
Another advantage of a pre-approved home loan process is that it is faster and more streamlined since only the necessary financial documents of the borrower alongside his or her credit score record are needed. This is not possible in the traditional home loan process. Apart from this, one can also request for the extension of the duration of a loan period in case the property is not getting finalised. It further adds to the benefits of availing a pre-approved home loan.
Things to note
If you are opting for a pre-approved loan, make sure that you have some options beforehand depending upon the type of house you are looking forward to buying, be it a luxurious apartment in western suburbs of Mumbai or a seaside apartment in Goa. Also, make sure that you keep your credit score in check and avoid applying for the pre-approved frequently as it can negatively impact your credit score.
Since now you are well acquainted with the fundamentals of a pre-approved home loan, you can go ahead and opt for it and avail its many advantages.