For owning a home, how you get along with your home loan is an utmost important factor. With the competition among the lenders, home loan search needs the same effort as the search for your dream home. So, the comfort lies with the customer now how fast he can choose the home loan and get his eligibility check done for no further delays after he selects the dream home. This is Pre-approved home loan.
The bank Pre-approves the loan after thoroughly evaluating the credit history, income and expenses of the potential borrowers. Based on this evaluation, the lender decides whether the borrower qualifies for the home loan or not and the maximum amount, the borrower is entitled to. It is basically a green signal given by the lender that the borrower can opt for a home loan for a particular amount.
How are loans Pre-approved?
The procedure for availing such a loan is shown below: –
1). At the outset the borrower first has to make an application to the bank for a Pre-approved loan
2). Based on the borrowers income capacity, the bank decides the amount of loan the borrower is entitled too. Additionally banks will also check the CIBIL score of the borrower
3). Once the required verifications are checked by the bank, the bank will issue the loan sanction letter to the borrower. The letter will be valid for a certain period of time that will be clearly mentioned in the letter itself, along with the terms and conditions of the loan
4). The bank charges a small processing fee for Pre-approving a loan
5). The borrower should decide a property before the expiry date on the sanction letter to avail the loan
Benefits of a Pre-approved loan
1). Plan your finances: Once you have received a pre-approval from the bank, you can plan your finances better. You know how much the bank is lending you, so you can look for a property within that range.
2). Discounted rates on Pre-approved Loans: Many times the banks offer discounts on the rate of interest of loan that is Pre-approved., just as an incentive to go for a Pre-approved loan.
3). Faster Processing: When your loan is Pre-approved, it means that the banks have done a thorough background check on your income and credit history. Unless there is a change in your income, you are sure to receive the loan quickly, with the bank only verifying your property documents, thus reducing the processing time.
It’s always better to get your loan Pre-approved. Once your loan is Pre-approved you can save time by narrowing your searches to the properties that fit your loan amount. It also adds a credible amount of certainty, that you are sure to receive a loan if you find a property within the stipulated time.
Disadvantages of a Pre-approved home loan
1. Pre-approved home loan is offered at flexible rate of interest but not at the fixed rate of interest. So, prepare your mind as you cannot shift to fixed interest rate once you finalize your property.
2. All the charges applicable to know the eligibility, say processing fees,etc., are not refundable if you don’t go for a loan later.
3. The eligibility and the loan amount is fixed and you cannot change if you wish to. This might make things tough if you want more amount for loan than estimated for or opted for.
4. Don’t apply many a times as it might affect your credit score. Though you haven’t decided on your home, but you had applied for your home loan, this is considered for your credit score.
How Loanyantra can help you with a Pre-approved home loan
Loanyantra, helps you manage your loan from the time you start searching for the best lender. You just have to contact the customer relationship manager, to know your eligibility and to know the best bank for your requirement. And that manager is with you till the end of the loan disbursement. Hence, go stress-free with us on home loans, either Pre-approved Home Loan or Organic home loan.