Everything to Know about Pre Approved Loans
May 17, 2019 Home Loan
Potential buyers prefer pre-approved loans over any other loan. And why shouldn’t they? Pre-approved loans are easier to get, and they take much lesser time than the other loans. With pre-approved loans, your bank already knows about your job, credit history, income, age, and all the crucial details that are required to approve the home loan. The bank is already giving you a loan they seem is fit for you. This also makes a borrower take a sound decision. He knows where he stands financially and how much he can churn out quickly without hurting his fiancés.
Even the developer will be more willing to negotiate on the property cost since they already know that you have a pre-approved loan from the bank.
The entire process of pre- an approved loan is quick and fast. As compared to a traditional home loan where the borrower has to apply for a home loan, fill in all the details, submit all the necessary papers and wait for weeks before they get it approved. There are chances that if you have sights on a particular property, someone will grab it before you. There’s no such long waiting when it comes to a pre-approved loan. The loan can be dispersed to you in at most a week.
But among all the advantages there are certain things about the pre- an approved loan that one should keep in mind before opting for one.
We discuss them below:
Even the developer will be more willing to negotiate on the property cost since they already know that you have a pre-approved loan from the bank.
The entire process of pre- an approved loan is quick and fast. As compared to a traditional home loan where the borrower has to apply for a home loan, fill in all the details, submit all the necessary papers and wait for weeks before they get it approved. There are chances that if you have sights on a particular property, someone will grab it before you. There’s no such long waiting when it comes to a pre-approved loan. The loan can be dispersed to you in at most a week.
But among all the advantages there are certain things about the pre- an approved loan that one should keep in mind before opting for one.
We discuss them below:
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Cost
Most banks offer pre-approved loans for free, and there is no cost involved. But some private banks can charge you anything between Rs 1000- 2000 for choosing the facility. If you are not able to avail the loan within the specified time, as mentioned in the loan agreement, then the bank will forfeit the deposit.
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Time limit
If you have availed a pre-approved loan, then you need to purchase the property within the given time frame which can be anything from three months to six months. If you fail to buy a property in that period, then the processing fee that you have paid will be forfeited.
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Credit score
The failure to secure a loan and repeated application reflect poorly on your credit score. Make sure you take the home loan only when you are confident about it.
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Rate of interest
Most people argue that their reason for taking the pre-approved the home loan is because of the high-interest rate. Well, the interest rate for the pre-approved loan changes every month too.
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Property assessment
The banks will do a physical property assessment to make sure that they are giving you a loan for a property which is worth investing. They also make sure that the loan they are approving you is worth the property. If they are giving you a loan and the value of a property is much less than the loan amount, then the loan will not be approved.
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Your finances
Your bank does check your financial standing before giving you a loan. Just because you have it pre-approved does not mean that it will not do a background check on your work and income.
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