Benefits of Taking Pre-Approval Home Loans

If you are planning to apply for a home loan to get the funds to buy your dream home, you must know that there are different kinds of loan facilities in India. One such type is the pre-approved loan. A pre-approved home loan is basically an in-principal approval you get from a lender based on your income, creditworthiness, and financial status.

Generally, pre-approval home loans are obtained before selecting a property. Some lenders in India allow borrowers to get instant online approval and apply for the loan online with a click of a few buttons.

Important factors to consider while applying for a pre-approved home loan

Approval for the principal amount

When you prequalify for home loan, it essentially means that the lender is willing to offer you a loan even before you approach them or send in your application. Generally, the lenders offer pre-approved home loans based on your financial standing and repayment capacity.

You can get the disbursement of this loan provided you have already chosen the property within the validity period of the pre-approved loan. Also, the property you wish to buy must meet the legal and technical requirements of the lender.

For example, you may have a home loan pre-approval offer in hand, but the lender may deny disbursing the amount if the property that you want to buy does not have a clear title or its ownership structure does not fall within the permitted norms.

Limited validity

Generally, pre-approved home loans have a limited validity, which can range from two to six months, depending on the lender. This means once you get a pre-approval home loan offer, you must finalise the property within the validity period. If you fail to do so, you may either lose the offer or must get our pre-approved offer appraised at a nominal cost and submit your latest income-related documents.

Terms and conditions of the loan

The terms and conditions mentioned in the pre-approved loan may change later. Generally, the lenders work out the final terms at the time of disbursing the loan. For example, let us say, if you prequalify for home loan of Rs. 10 Lakh in July 2024 and by the time you finalise the property in September 2024, the interest rates may change.

In such instance, the terms and conditions of the loan may also change. The following table will give you a better understanding of the changes in the loan terms.

*Please note – The interest rates mentioned above is for indicative purposes only, the actual interest rate may vary based on the lender and from time to time.

Benefits of a pre-approval home loan

• Makes property search easy
  
  

  While buying a new home one of the most important concerns people have is getting the loan. But with home loan pre-approval you breathe easy that your finances are sorted. Also, you have a fair idea about the loan amount you are eligible to get and how much funds you must arrange from your own sources.

  
  

  Also, based on the pre-approval loan amount, you can decide on the maximum budget for a home purchase and shortlist the properties accordingly. Thus, you can avoid spending time and effort considering properties that do not fit your budget.

  
  
• Negotiate better with the seller or real estate builder
  
  

  When you have a pre-approval loan offer in hand, you can be in a better position to negotiate a better deal with the property developer or the seller.

  
  
• Quick processing and disbursement
  
  

  In general, during the pre-approval stage, the lenders evaluate only your income credentials. However, when you proceed with the loan application, they will also carefully verify and evaluate the property-related documents. Since the credit appraisal is done in advance, you can expect your application to be processed faster and to be disbursed sooner.

  
  

  Faster processing and disbursement of home loans also facilitate a hassle-free home-buying experience, and you need not worry about missing out on a good property deal or rising property prices.

  
  

  While a pre-approval home loan has benefits, it is paramount to know that it is better to apply for the loan only when you are certain about buying a home. Also, it is advisable to do your research well about the lender before proceeding with the application process.

  
  

   Always choose to apply for a home loan only with reputable and credible financial institutions. like Aditya Birla Housing Finance Limited that has a reputation of offering a wide range of housing loan solution to suit the different needs for all. They also offer the loan at attractive interest rates, starting from 8.6% per annum, and you get a repayment period of up to 30 years, which makes repayment easy and affordable.