What Is Pre-Approved Home Loan?
Getting preapproved for a home loan is considered to be very important in the process of buying a home. You can start off by consulting with a bank or lending institution and providing details about your home loan capital requirements. By getting a pre-approval letter from your bank, you will be able to discuss all the available loan options and budget your loan with your lender. This article discusses pre-approved home loan benefits and how to get a pre-approved home loan.
What Is a Pre-Approved Home Loan?
A pre-approved home loan is a sanction provided by the lender. The bank will determine your eligibility for a home loan before granting this pre-approval. Unlike a typical home loan, a pre-approved home loan does not involve plenty of scrutiny along with legal and technical validation of the property. After verifying all of your information, the bank will assess your eligibility and license a loan with a particular interest rate.
However, you will be required to submit all of your property documents along with your financial information. It is also important to remember that a pre-approved home loan does not translate to a guaranteed home loan. The lender would still have to approve your application before granting a home loan.
Benefits of Pre-Approved Home Loans
There are plenty of benefits that come along with pre-approved home loans. Here are 3 key benefits.
1. Negotiate With The Lender:
As you gain an understanding of your eligibility and the interest rate offered directly from your lender, you would be in a better position to negotiate the interest rates and other terms. With a sanction letter in hand, negotiating becomes easier.
2. Easier And Faster Loan Process:
Now that your loan application has already been verified and pre-approved, you can speed up the process of your home loan application. The only processes that have to be completed for disbursal include the income document certification and the legal procedures.
3. Better Financial Planning:
When you get your home loan pre-approved, you gain a deep understanding of your financial eligibility, repayment requirements, and others. This insight can help you plan your finances better and stay on track with your loan repayment.
The eligibility criteria for a pre-approved home loan may vary depending on the bank you are availing the home loan from. However, there are certain common criteria that have to be met to be eligible for a pre-approved home loan.
- Age: To apply for a pre-approved home loan, you should be a minimum of 21 years and a maximum of 70 years of age.
- Credit Score: Your credit score is a crucial criteria to apply for pre-approved home loans. It should be at least 700 or above.
- Employment: People from a horizon of employment can apply for pre-approved home loans. Both salaried and non-salaried individuals who are existing or non-existing customers can apply.
Things To Keep In Mind While Applying For a Pre-Approved Home Loan
While getting a pre-approved home loan can be extremely beneficial, here are some things that you should keep in mind.
1. Associated Fees:
It is important to consider the fees that are associated such as the pre-approved home loan processing fee and others.
2. Expiry Date:
Your pre-approved home loan may expire over time. Usually, the time range for your pre-approved home loan can vary between 3 and 6 months. Make sure that you check the expiry date with your lender.
3. Credit Enquiry:
You may be subject to credit enquiry once you apply for a pre-approved home loan. This is a process during which your lender will check your credit score and assess your creditworthiness.
4. Rejection of Application:
It is important to understand that pre-approved home loans do not guarantee the disbursal of your home loan. Your application has to be verified by your lender after the pre-approval process for your home loan amount to be disbursed.
5. Interest Rate:
While you apply for a pre-approval, make sure that you discuss the interest rate with your lender. In many cases, the interest rate of the home loan may be fixed during the time of pre-approval.
Pre-approved home loans can help understand your eligibility and also plan your finances in advance. While getting your home loan pre-approved can fasten the home loan application process, it is not a guarantee of disbursal. If you are looking to apply for a home loan, Piramal Capital Housing and Finance can offer you with home loans at competitive interest rates and plenty of benefits.
Also Read: Difference Between Home Extension Loan And Home Renovation Loan
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