Pre-approved Home Loans: Dos and Don’ts
Home buying made easy: pre-approved home loans, pre-verified properties & expert DSA services. Check tenure, additional cost, disbursal & foreclosure clauses.
Buying a home is a long-cherished dream and securing a pre-approved home loan is the cherry on top of a dream coming true. Getting home loan approval is quite a tedious process and the bombardment of pre-approved loan notifications while looking for a house for sale feels like the heavens are moving in your favour.
What’s a pre-approved home loan?
When the real estate market shows an upward trend, so does the home loan market get competitive. When people show interest in buying a house, banking and financial institutions facilitate this offer for their existing and new-to-bank customers to apply for pre-approved home loans even before they zero in on any property.
What happens here is banks check your credit score and finances to certify that you can avail of a home loan up to a certain amount in principle under certain terms and conditions. The sanctioned loan is valid for a certain time frame, say 4-6 months within which you can avail only after submitting the relevant property documents for credibility verification by the bank.
Top banks including SBI home loans and HDFC home loans offer affordable interest rates which might be enticing, especially when you are close to buying a property, but be aware of certain dos and don’ts before applying.
Make an informed decision on affordability, interest rates, EMIs and related particulars. Don’t assume pre-approval guarantees final approval. Listed below are Home Loan Do’s and Don’ts.
The Dos of Pre-approved Home Loans
- Affordability
While banks and financial institutions have done their due diligence on what should or could be spent on the property by you, ultimately it’s you who know your key spending and savings. Before selecting a home loan, calculate your monthly expenses. Check whether you can afford it and repay it easily.
With multiple schemes and attractive offers popping up now and then, it can be confusing and may be tempting to go for the higher loan amount. Keep your dedicated financial priorities in mind like home spending, kids’ educations, parents’ healthcare, family healthcare, etc. Never underestimate additional expenditures.
- Research Lenders Thoroughly
Do thorough research on banks and financial institutions offering pre-approved loans. Compare the interest rates and associated terms and conditions of major players like SBI and HDFC. See any opportunities for co-applicants. It helps lessen the burden. Be sure to detail out the pros and cons of the loan policies. Women applicants, in some cases, get lower home loan interest rates.
- Check Your Credit Score
A score of 750-900 is considered ideal to get a home loan sanctioned by banks and financial institutions at affordable and negotiable terms. Keep track of your credit score to avoid unnecessary hindrances in the approval process.
If it’s lesser take the right steps to improve it. You can also do so while deciding on a downpayment for a property. Let a DSA guide you through the process.
- Larger Downpayment Plan
Downpayment is the amount you pay from your pocket to buy a home. Generally, banks and financial institutes sanction only 80-85% of the property value. Decide on a larger downpayment or more than the mandated amount to reduce lenders’ risk and increase your credibility.
The Don’ts of Pre-approved Home Loans
- Skip not the Fine Print
This is the most common mistake. Even opting for a renowned lender, trust none. Before signing on the dotted lines, connect the dots between the offerings and terms and conditions.
Best yet, talk to DSA to find loopholes and avoid confusion and legalities later. Review the processing fees, late penalties and foreclosure charges.
- Longer the Better– Tenure
Do not opt for longer tenure. The longer the tenure, the EMI is lesser but the outflow of interest will be skyrocketing creating an additional financial burden. Calculate your total payable amount against the tenure and opt for the one that would be stress-free for you to repay.
Here’s a quick illustration of a home loan of Rs 40 Lakhs at an SBI home loan interest rate of 8.5% over a certain tenure:
| Loan Amount | Interest Rate | Tenure | Total Interest Payable |
| Rs 40 Lakhs | 8.5% | 10 years | Rs 19.5 Lakhs |
| Rs 40 Lakhs | 8.5% | 15 years | Rs 30.9 Lakhs |
- Major Financial Changes
If you plan to buy a house in the near future, stick to one job with a steady income flow. Banks and financial institutions prefer sanctioning loans to customers with a steady job. Loan approval might get denied with a record of a change in job or quitting right before applying for a home loan. Don’t change jobs or careers.
Moreover, put off application for a new credit card or other loans, before applying for a home loan. This shows an increase in debt burden.
- Property Evaluation
Make a thorough investigation of the property for purchase. While banks and financial institutions have a set of selected pre-approved properties that have already been evaluated and approved for home loans, do your own detective work on legal clearance, quality construction and market value. Thus it helps in faster loan processing.
A home loan is a valuable financial tool in your journey to buy a home providing clarity, confidence, and a competitive edge in the market. While it can help you during your financial crunch, it can crush your financial stability if not managed right. Visit www.theceyone.com and connect with our DSA to better understand your financial stand, research lenders and manage finances throughout the process. DSA can help you avoid common pitfalls and secure a loan that fits your needs. The Ceyone also offers a selection of quality, credible properties in Bangalore, Hyderabad, Pune, Tamil Nadu and Mysore.
