I have seen cases of friends who suffered due to delays in the sanctioning and disbursement of their home loans. I am yet to finalise on a property. My friends suggest that I go for a pre-approved loan. Is it a good idea? When you get a home loan pre-approved, the home loan provider gives a commitment to provide you with the loan at a contracted rate after you have chosen a property, within a stipulated period, mostly six months.
However, the bank will give early approval if it finds the chosen property suitable for mortgaging.
This commitment comes after a lender has thoroughly examined your credit-worthiness through the home loan process. You have to negotiate the home loan rates with various lenders and decide on the right lender after having done market research. Of course, you will have to pay the requisite charges, often 0.25-0.50 per cent of the applied amount, for loan processing.
These days, the period of the loan pre-approval is often extended, without the payment of any extra charge.
Apart from the certainty it lends, pre-approval helps in other ways. In many property transactions, you have to sign the buyer-seller agreement, where there might be a condition about the forfeiture of your payment amount, if the full payment isn’t made available within a certain period, mostly a month.
This delay can arise from loan processing delays. With pre-approval, half the loan processing is complete. The disbursal can materialise quickly after technical and legal scrutiny of your property. In this way, pre-approval can spare you a lot of anxiety.
