A "low interest" loan shouldn't mean you have very little interest in paying it back!
  • Pre-Approved Home Loan

    Owning a home is one of the most crucial decisions that you have to make in your lifetime. However, unless you have unlimited funds at your disposal, there is no other option but to take a home loan, to fund your dream. Housing finance companies as well as Banks, offer pre-approved home loans much before the borrower finalizes a property. Banks evaluate the borrower’s finance and also the property documents while sanctioning home loans and this can take up a lot of time. With pre-approved home loans, the approval process is faster and easier.

    Overview:

    If you look at all the things that can go wrong when you are looking to buy a home for yourself, you will be terrified. Imagine losing the property of your choice if your loan is delayed or if your loan application gets rejected. You can avoid all this stress if you are eligible for a pre-approved home loan.

    Pre-approved loans are attractive since it comes with unique features such as lower interest rates, very little documentation and quick processing, usually within 48 hours. A pre-approved loan is actually an in-principle sanction offered to you by a bank/financing institution on the basis of your credit score and financial stability. The factors that determine loan repaying capacity based on which the bank judges the borrower’s EMI, include: the individual’s income status, payback history, current EMI outflow and the net-worth. The bank then approves a particular amount that you can avail as home loan, within a fixed time period, which is usually 6 months.

    Most banks offer pre-approved home loans facility to both its existing customers as well as new customers. After verifying the financials, the bank evaluates the pre-approval application and sanctions a loan which is valid for a definite period. The customer can avail the loan during this period, but only after submitting the relevant property documents required for due diligence check and verification.

    You should take a pre-approved loan only if you have finalized the property of your choice. A pre-approved loan makes the process of availing loan and making the purchase, quick and hassle-free. Another added advantage is that your credibility to the builder increases and hence you can negotiate the prices since you also have readily accessible funds to make the purchase, as compared to someone who will have to raise it.

    Features of Pre-Approved Home Loan:

    • Pre-approval of home loan need not necessarily mean guaranteed sanction. A pre-approved loan is not an assured loan since it depends on the successful verification of all relevant documents. Banks are under no obligation to approve the loan request and make the final call on whether or not to disburse the approved amount.
    • Costs involved: Pre-approved loans are low interest rate loans but it also has certain fees and charges. Most banks charge a processing fee for pre-approval of loan. Such costs are not refundable whether you ultimately avail the loan or not. Generally, floating interest rates are applicable on such loans and if you wish to avail a loan at fixed rate of interest, a pre-approved loan isn’t for you.
    • Loans are valid for a specific time frame - if you do apply for it within that period, the pre-approval ceases to exist and you will have to apply later on when the offer is available, and the fee involved will be levied again.
    • Affects credit: Credit gets blocked to the extent of the amount that you want pre-approval for. If you need to take a personal loan or an education loan during the period when the pre-approved home loan is valid, your payback capacity will be calculated based on the pre-approved loan.
    • Availability of discounts: Discounts on interest rate are offered by most banks, on a pre-approved loan.
    • Quicker loan processing: Since the bank already has the important details about your finances, the time taken to process the loan is usually lesser.
    • Negotiating with your seller: Having a pre-approved home loan enables you to successfully negotiate with your seller. The builder will be aware that your finances are in order and that you are a genuine buyer since pre-approved loans are available for a particular time period only.

    Eligibility for Pre-Approved Home Loan:

    If you are wondering whether you are eligible for a pre-approved home loan, look no further. The answer lies in your credit track record. Your eligibility to avail a pre-approved loan is judged by the Banks on the basis of the various accounts you may hold with them. If for example, you have a salary account with a bank, then the bank has access to your transactions such as the amount of salary drawn, liquidity in your account, if you have any loans, late payments and this also helps them understand your cash outflow.

    Credit cards that you own also give an insight into your finances. Thus, a savings account and/or a credit card with a bank offers the information required to calculate the amount of loan you could be eligible for. If a customer has an impeccable track record of paying loan EMIs on time and if he/she has an impressive credit score from CIBIL, one of India’s leading credit rating agencies, then the bank considers the customer eligible for the loan that it can offer based on these records.

    The process of arriving at the exact amount to be offered as pre-approved loan would depend mainly on factors such as:

    • Income and savings capacity of the customer
    • Transactions made through the Bank account ( e.g.: cheque bounces would be viewed negatively)
    • Consistency in deposits such as salary deposits and other cheques.
    • Some banks pre-approve home loans to its existing customers even if they have not taken a prior loan, based on certain factors such as the cash inflow and transactions in their salary accounts or the repayment records, if they are credit card holders.

    Interest Rates applicable for Pre-Approved Home Loans:

    The main highlight of a pre-approved home loan is that the interest rates will be comparatively lesser than the rate of interest offered to other customers who avail a regular home loan scheme. However, it is important to confirm the nature of the interest applicable, i.e., whether it is a fixed interest or a floating interest.

    Banks often consider the interest rate prevailing at the time the customer applies for the home loan, while calculating the borrower’s repayment capacity. Any change in the interest rate during the tenure of the pre-approval will affect the final loan amount. Thus, the amount that is disbursed to the customer eventually, may be different from the sanctioned loan amount due to the adverse impact of interest rate changes. The sanction letter mentions the interest rate applicable for the home loan, and this would be based on prevailing home loan interest rates. Like the pre-approval, the special rate of interest will also be valid only for a specific period, starting from the date of issue of the sanction letter.

    Interest rate would also change depending upon the nature of the interest, as chosen by the borrower, i.e., fixed or floating. Kotak Mahindra Bank offers a special interest rate during the period of validity of the sanction, which is one month. The interest rate may change later on, depending on whether you choose fixed or floating home loan rate. This applies for other banks like ICICI Bank, HDFC and SBI.

    HDFC Ltd, is one of the oldest private banks in the country and offers a home loan amount of 80% of the Sale Agreement Value rather than the Registration Value with significantly smaller EMIs. Axis Bank promises the lowest processing fees and quickest home loan disbursal. For a pre-approved loan from ICICI bank, the floating interest rate is 9.85% and fixed interest rate is 10%. This is however subject to change.

    Pre-approved home loans are a boon for many who wish to promptly plan and execute their real estate investments, but such sanctions depend on several factors and is beneficial only if there is a marked difference in interest rates and charges that would help to save costs incurred while acquiring your property.

    FAQs about Pre-Approved Home Loan:

    1. What are the benefits of a pre-approved home loan offer?

      Pre-approved loans have many advantages such as discounts on real estate prices, lesser interest rates compared to regular home loans, quick processing, limited documentation, etc.

    2. How can I evaluate whether the pre-approved loan amount is right for me?

      Loans are pre-approved by Banks on the basis of your credit history and previous loan repayments, if any. Hence, the amount approved need not be as per your actual requirement but based on your capacity to repay the loan. It is important to calculate the actual cost of purchase of a property to decide on the loan amount that you require and not based on the costs of the amount being offered to you.

    3. What are the documents required?

      Depending on whether the applicant is self-employed professional, salaried individual or an entrepreneur, the documents that need to be submitted varies. Generally, the necessary documents include proof of identity, residence proof, bank statement of the past six months', latest salary slip or Form 16, certificate and proof of business existence, income-tax returns of the past three years' (in case of self-employed/business) as well as profit/loss statements, balance sheets and so on.

    4. What is the validity period?

      There is no particular period within which the applicant is required to avail the offer. However, the pre-approval is open only for a maximum period of six months and if the applicant does not apply within this period, it becomes null and void. The validity period might vary from bank to bank. For example, State Bank of India specifies that the borrower has to identify the property he/she wishes to purchase within 60 days. Kotak Bank states that the validity of their home loan sanction ranges from 1-3 months.

    5. Once I get the sanction letter, when will the loan amount be disbursed?

      In order to avail of the loan, the borrower must finalize a property before the expiry date specified in the sanction letter. The property documents are to be submitted to the bank and if the documents are in order, the loan will be disbursed.

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    Pre-Approved Home Loans Reviews

    • Bank Bazaar Home Loan
      "Thanks waiting for positive"
      0.5 5.0/5 "Blown Away!"
      Will meet soon. I am taking my first home loan plz fulfil my dreams. My cbill & bank records are very good . So i am vaiting for positive side . I have no home in pune & i am here from last ten years. I have not bounced any cheque or any EMI in my life. I have taken my first bike with HDFC Loan plz check my record. Thank You Prakash Bhosale
      Was this review helpful? 0
      , pune
      Reviewed on Jun 14, 2019
    • Axis Bank
      Axis Bank Home Loan
      "Good Service"
      0.5 2.5/5 "Just OK"
      I have taken home loan directly through Bank.The rate of interest and the processing fee was nominal ,directly applied through bank ,The loan amount was 16.85 lakhs ,for the tenure of 20years ,still this loan is active .I have got the loan on time and it was sufficient as well .I am completely satisfied with the service .
      Was this review helpful? 0
      , ahmedabad
      Reviewed on Jun 14, 2019
    • DHFL Home Loan
      "Good"
      0.5 5.0/5 "Blown Away!"
      I have taken a home loan in DHFL before 3 years ago, as per my requirement the loan amount was not met which was provided from DHFL for the duration of 20 years. On time the loan got sanctioned. The rate of interest is nominal and the processing fee is applicable and nominal.
      Was this review helpful? 0
      , hyderabad
      Reviewed on Jun 14, 2019
    • review Home Loan
      "GOOD"
      0.5 5.0/5 "Blown Away!"
      I am using the home loan from last 4 years and the documentation process was done through offline as it was done quick also i got loan amount after 1 month. The loan amount given partially, the loan amount given was sufficient and the rate of interest given was 10.1% approx. The duration for repaying is for 15 years.
      Was this review helpful? 0
      , pune
      Reviewed on Jun 14, 2019
    • HDFC Limited Home Loan
      "Excellent Service"
      0.5 5.0/5 "Blown Away!"
      I have taken a home loan in HDFC bank for more than one year. At the time loan process in easy manner and got sanctioned within a month for the amount of 25lakhs duration of 15 years. The rate of interest is nominal and the processing fee is applicable and nominal.
      Was this review helpful? 0
      , ahmedabad
      Reviewed on Jun 14, 2019
    • SBI Home Loan
      "Good"
      0.5 4.0/5 "Great!"
      I have taken a home loan in STATE BANK OF INDIA before 4 years ago. As per my requirement the loan amount was not sufficient from which bank provided and was low for the duration of 20 years. The rate of interest and the processing fee are nominal for this loan.
      Was this review helpful? 1
      , coimbatore
      Reviewed on Jun 14, 2019
    • review Home Loan
      "Good service"
      0.5 4.0/5 "Great!"
      I have been holding my housing loan with Aadhar housing finance , the loan amount which they have given to me was good, it was sufficient for me, the rate of interest they have charged me was nominal, i got loan with less documentation, So far i did not face any issue in getting loan.
      Was this review helpful? 0
      , kanpur
      Reviewed on Jun 14, 2019
    • Bank Bazaar Home Loan
      "Home Loan Application"
      0.5 5.0/5 "Blown Away!"
      Absolutely Great Information and very quick service by App. It's a great app with all the information regarding home loan. I m very happy with this app. Amazing offers all the time and the best thing about free credit check. Really Awesome Service . Thanks. Hardeep Kaur Bhatia
      Was this review helpful? 0
      , delhi
      Reviewed on Jun 13, 2019
    • DHFL Home Loan
      "Good service"
      0.5 4.0/5 "Great!"
      I have taken home loan through DHFL BANK . I am happy with their services considering the loan experience. The tenure period is fair enough . The Application process was smooth and the loan amount was credited to my account with in few days. Rate of interest is nominal .
      Was this review helpful? 1
      , new delhi
      Reviewed on Jun 13, 2019
    • HDFC Limited Home Loan
      "Best Experience"
      0.5 5.0/5 "Blown Away!"
      From Hdfc Limited I took housing loan it was through online channel, my principal amount was Rs. 40 lakhs, the interest rate is nominal as per the RBI guideline, there was no processing fee taken from my end. I added my spouse as a co applicant, hence the process was easy. They are doing online documents its simpler. I purchased a land to construct an individual house.
      Was this review helpful? 0
      , chennai
      Reviewed on Jun 13, 2019
    • Tata capital Home Loan
      "Not happy with service"
      0.5 2.0/5 "Expected more"
      My housing loan was taken with TATA CAPITAL .My home loan experience was good with TATA CAPITAL, the loan amount was satisfactory and they followed up on time. But my experience with this institution is not is good they need to improve more . I got loan on time.
      Was this review helpful? 1
      , hyderabad
      Reviewed on Jun 13, 2019
    • Bank Bazaar Home Loan
      "hl reviews"
      0.5 4.0/5 "Great!"
      Bank bazar presse is very fast and good..bt wait for products ,how much time i have received...in esy way. Thanks .. I always forward my frnds relatives and others known person... They can take the help for financial services... So as a good financial advisor... This is very good supporting teem.
      Was this review helpful? 0
      , chennai
      Reviewed on Jun 13, 2019
    • Oriental Bank of Commerce Home Loan
      "Best bank"
      0.5 5.0/5 "Blown Away!"
      Being a nationalized bank and their elite banking service, i have purchased my home loan from Oriental bank of commerce. I have visited their different branches and the employee response was fantastic and the manager will come and ask for the customer's needs. Their interest rate are as per the RBI rules and actually i have taken the home loan from Global trust bank after that it merged into oriental bank of commerce.
      Was this review helpful? 0
      , bangalore
      Reviewed on Jun 12, 2019
    • RELIANCE HOME FINANCE LIMITED Home Loan
      "Good service"
      0.5 5.0/5 "Blown Away!"
      I had taken my Home Loan from RELIANCE a while back where the process in getting the loan was fine. The loan amount has been sufficient and the interest rate has been nominal. The charges which they had made has also been nominal as well. Overall it had been a pretty good experience.
      Was this review helpful? 0
      , chennai
      Reviewed on Jun 12, 2019
    • Bank Bazaar Home Loan
      "Experience with bank bazaar.com"
      0.5 4.0/5 "Great!"
      I used the app for the first time and was astonished with the array and speed of info. I got in a span of a few minutes. Really appreciate the same and look forward to using more services and products offered. Would suggest the same to family and friends
      Was this review helpful? 0
      , delhi
      Reviewed on Jun 12, 2019
    • Bank Bazaar Home Loan
      "Very good for layman's"
      0.5 4.5/5 "Excellent!"
      Good for detail in your hand within conform process easy. good experience in the first time online loan processing. Also I suggest or the other people's go through bankbazar.com I need held please provide the loan I am satisfied for prompt reply. Thanks
      Was this review helpful? 0
      , indore
      Reviewed on Jun 12, 2019
    • IDBI Home Loan
      "Best loan experience"
      0.5 5.0/5 "Blown Away!"
      IDBI housing loan process is very easy, I submitted KYC, address proof, form 16, property documents. The bank taken only 15 days of time to sanction the amount after collecting the papers. I took Rs. 16.5 lakhs for the duration of 20 years, the interest rate is very lesser around 8.5% its better in the market.
      Was this review helpful? 0
      , kolkata
      Reviewed on Jun 12, 2019
    • review Home Loan
      "Good Experience with better facility"
      0.5 5.0/5 "Blown Away!"
      In GIC housing finance, the home loan interest is very much convenient, they are charging 9% of interest. The loan amount was sanctioned as per the amount requested from my end. I visited to the branch twice, remaining the field executive came to my place and completed the process. The bank is giving 8.5% of interest here 9% hence slightly more but its good. I took the loan before 6 years they do have balance transfer, part payment and pre closure.
      Was this review helpful? 0
      , new delhi
      Reviewed on Jun 12, 2019
    • ICICI Bank Home Loan
      "Very Excellent services"
      0.5 5.0/5 "Blown Away!"
      Purchased my home loan very long back like 15 years back that time this provided me a good loan amount hence i have chosen them. The loan is already over. I have chosen the tenure period for 10 years. I applied the loan amount of Rs. 10 lakhs and the interest rate was convenient and they have sanctioned the loan in 3 days.
      Was this review helpful? 0
      , mumbai
      Reviewed on Jun 12, 2019
    • HDFC Limited Home Loan
      "Excellent service"
      0.5 5.0/5 "Blown Away!"
      I have been taken my housing loan with HDFC LTD from long time, the loan amount which they have given to me was sufficient, it was as per my requirement, the rate of interest they have charged me up to 8.8% which was less comparing to other bank, even the processing fee they have charged me was minimal, Still this loan is running.
      Was this review helpful? 1
      , ahmedabad
      Reviewed on Jun 11, 2019
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