Excess liquidity in the financial system calls for new and innovative offers to lure customers. Most banks have started to advertise about pre-approved home loans yet again. If you ever wondered what could be this pre-approved home loan, don’t worry, this is just to make you feel more secure about the possibilities of taking a loan to acquire a house without the hassles of the cumbersome loan sanctioning process.
All lenders seek such customers whose credibility is sound and healthy. If you happen to have an impeccable track record of paying your loan EMIs pertaining to your past borrowings and more importantly if you have an encouraging score given by CIBIL, a credit rating agency, then a bank would assess the eligibility of a loan that it can extend based on such records.
The process of arriving at the sum of pre-approved loan would also depend on income and savings capacity, bank account transactions (cheque bounces would be viewed negatively), consistent depositing such as salary deposits and other checks.
Pre-approved loans are an in-principle sanction given by banks for a particular loan amount. Such sanctions would be to a certain pre-decided quantum, say Rs.20 lakh, and most banks even give an official letter stating that you are eligible for availing yourself of such a loan.
It should be noted that such a letter is only “in-principle” and should not be construed as the loan has been completely sanctioned. It would be subject to fulfilling the conditions of the bank before the actual loan amount would be released and also would have a validity period, usually six months.
There are a few significant advantages of such pre-approved loans:
PlanningIt helps in planning for any property investment and the extent of loan that one can depend on
Negotiation powerHolding such a sanction letter from a bank improves the negotiation power with the builders from whom one can negotiate better prices since it gives confidence that the buyer is serious and the loan would be indeed sanctioned in quick time
Lesser loan processing timeIt also reduces the documentation process which otherwise would have been cumbersome and time consuming. With the loan sanction turnaround time reduced to almost one-third of the normal loan processing time it makes sense to have a pre-approved loan from one’s bank
Real estate consultant’s roleIf the property is been sought through a real estate agent he would be proactive in providing some good options since he would be sure of the purchase and his subsequent commission.
Pre-approved loans could be a boon for many who would like to plan their real estate investments, but such sanctions would only come if one is good with his/her financial transactions and track record.
