A pre-approved home loan is a conditional approval for a loan that is granted based on the borrower’s income, creditworthiness, and financial standing. It’s typically obtained before the borrower has found a specific property to purchase.
To apply for a pre-approved home loan, the borrower usually needs to submit their financial information to a lender, such as a bank or housing finance company. The lender reviews the information and provides the borrower with a pre-approval letter, which will state the maximum loan amount they are eligible for and the interest rate.
Also Read: Home Buyers Take Note: What You Must Know Before Booking Under Construction Flat
Validity of pre-approved loans
Pre-approved home loans are typically valid for 3-6 months. This means that the borrower has this amount of time to find a property and close on the loan and get it disbursed. If the borrower does not find a property within this time frame, they may need to renew their pre-approval. However, the validity tenure may differ according to a bank’s policy.
Each lender may have its own specific criteria and procedures for pre-approvals, so it’s necessary to compare their offerings, and choose the one that best suits your needs.
There are many benefits to getting pre-approved for a home loan before you start looking for a property. It shows sellers that you are a serious buyer and that you have the financial means to back up your offer. It can also help you negotiate a better price on the property, as the seller will know that you are qualified for a loan and a ready-buyer.
Knowing that you have been pre-approved for a loan can give you peace of mind as you shop for a property. You won’t have to worry about being able to get a loan once you find the right property.
How to apply for a pre-approved home loan?
To get pre-approved for a home loan in India, you can apply directly to a lender or through a loan aggregator. Loan aggregators are websites that compare offers from different lenders and help you choose the best loan for your needs.
To apply for a pre-approved home loan, you need to submit your financial information to a lender. This includes your income, mandatory documents, tax compliance proofs, employment/business proof etc..
The lender will conduct a credit check to assess your credit score and credit history. A good credit score is usually a key factor in determining whether you qualify for a pre-approval.
If you meet the lender’s criteria, you will receive a pre-approval letter. This document typically states the loan amount you are eligible for, the interest rate, and other terms and conditions. It serves as proof that you are a serious and creditworthy buyer when you make an offer to purchase a property.