“As our special customer, we want you to have a truly prosperous life. And, so we are happy to inform you that you’re eligible for a pre-approved home loan.” How significantly does this sound familiar to you? It’s quite probably that sometime in your life you could possibly have received a mail or an SMS congratulating you on your eligibility for a pre-authorized loan.
A pre-authorized property loan is offered to eligible shoppers who have a sound economic background. Simply place, it is an give for a property loan based on your creditworthiness. Based on fulfilment of particular pre-determined terms and circumstances, economic institutions can provide such loans to possible borrowers.
Even just before you are produced any give, the bank has currently assessed your economic track record. For instance, if you have a salary account, the bank will have an assessment of your earnings and your everyday money flow.
However, the pre-approval does not assure an give. It is merely an indicator based on your eligibility to get a loan.
To get your property loan authorized, your banks run errands to do correct authentication and verification of your economic background and assess the house you are going to purchase. Even although there is no assure for the final give, a pre-authorized property loan has particular positive aspects and offers the borrower an upper hand when negotiating with the developer.
A pre-authorized property loan can be fairly attractive for the borrowers for its many positive aspects and functions. Let’s fully grasp why!
Better position to negotiate with the lender
Considering the reality that your property loan has currently been authorized by the bank, this will give you the energy to negotiate with the lender. Negotiating becomes straightforward right here mainly because with a sanction letter in hand the bank is taking you seriously for the acquire. Also, even just before you negotiate with the lender, you could possibly currently be provided competitive interest prices.
This is mainly because the bank is assured about your finances and your potential to repay and they are more probably to convert into actual purchasers than just basic enquiries. Along with the low-interest prices, you also get to decide on the tenure of repayment for the loan that tends to make for pocket-friendly EMIs.
Loan processing becomes straightforward and rapidly
The application for a pre-authorized property loan is more quickly and easier than a standard property loan. Since at the pre-approval stage, the lender has currently verified the earnings documents of the borrower, the method of loan dispersal becomes straightforward and swift.
The only method left just before loan disbursal is the house document verification and other legalities. As quickly as these documents are verified, the sanctioned loan quantity is disbursed.
Effective house search
There is no worst feeling than not becoming capable to close in on the home you are eying to purchase. But with a pre-authorized loan, a borrower is in a superior position to search for a appropriate house as you are conscious of your spending budget. For instance, a individual with a pre-authorized loan of Rs 1 crore will look for a home inside Rs 80-90 lakh.
Better economic organizing
When you are applying for a property loan, you largely have no notion about your property loan eligibility and at times finish up with a rejected application. For instance, as per a person’s economic record such as credit, incomes, and other variables, the person could possibly be only eligible for Rs 80 lakh property loan, even so, at occasions the person would apply for a bigger property loan quantity, such as, say Rs 1.2 cr.
This way you are more probably to finish up with a rejected application. However, the pre-authorized property loan tends to make you strategy your finances accordingly. As you would have the correct notion of your eligibility, you will be narrowing down the house choices accordingly.
This assists save time and work for you that could have been wasted on inspection of a house that was out of the spending budget.
The Bottom Line
A pre-sanctioned give is the ideal selection for a lot of borrowers as this is the least risky way to get into an eligibility tangle, when you are dependent on a loan to purchase a property.
Apart from a lot of positive aspects, the ideal aspect is that you are more conscious of your property loan eligibility and spending limit. This way it not only assures you to get your property in the present market place situation but also tends to make you a extremely credible purchaser whom any seller will take seriously and give a deal to.
(By Atul Monga, Co-founder & CEO, Standard Home Loan)