Should I Apply for a Pre-Approved Home Loan or an After Property Finalisation Loan?

These days, when borrowers decide to become homeowners, they have two options. First, they can either apply for a Home Loan even before they begin their property search or they can apply for a loan after they have finalized the property they wish to buy. Pre-approved Home Loans are loans that borrowers avail of before even finalizing a property. Though pre-approved Home Loans offer several advantages, these loans are valid only for a period of up to 6 months. Therefore, if you are not sure you will buy a property within the next six months, applying for a pre-approved housing loan does not make sense.

If you want to get a pre-approved Home Loan, there are two things you must do. First, before applying for the loan, go to your lender’s website and check their housing loan eligibility criteria. Apply for pre-approved Home Loans only if you meet your lender’s housing loan eligibility criteria. Inability to do so will lead to loan application rejection and your credit score taking a hit. Further, use a Home Loan EMI calculator  to work out the EMIs you can afford to pay each month so that you never face a situation where you feel compelled to default on loan payment.

Now that we know a little bit about pre-approved Home Loans, let us look at their advantages and why borrowers must opt for these loans.

Advantages of Pre-Approved Home Loans

Quick Approval and Instant Disbursal

The biggest advantage of a pre-approved housing loan is that approval and disbursal come immediately. This means as soon as you have finalized the house you wish to buy, you will have the money in your account to go through with the purchase.  

Avail of a Home Loan at Low-Interest Rates

When borrowers don’t go for pre-approved Home Loans and instead, wait until after they have finalized the property they wish to buy to apply for a Home Loan, lenders know that the borrower is in a hurry to go through with their property purchase. Therefore, lenders don’t agree to negotiations and in such a case, the borrower must often agree to high Home Loan interest rates. High Home Loan interest rates lead to high EMIs and make paying off the loan difficult. Therefore, borrowers must try their best to avail of a Home Loan at the lowest interest rate possible.

Minimum Paperwork Required

When you are already pre-approved for the loan, you will need minimum paperwork at the time of Home Loan disbursal. This is because your lender must have already completed document verification before. Thus, when you finally decide to buy a home and you are pre-approved, you won’t be required to submit a lot of documents at the last minute and the whole process of availing of the loan will become easier.

It Helps You Stay Within Your Budget

When you are pre-approved for a housing loan, you already know the monthly EMIs you must pay each month if you decide to go ahead with the property purchase. Thus, a pre-approved loan helps you decide your budget and streamline your search for the right property for you. This ensures a smooth and hassle-free housing loan repayment journey.

Also Read: Smart Things to Consider Before You Apply for a Home Loan 

Final Words

A Home Loan is an excellent way to fund any real estate purchase. Borrowers get access to a substantial amount of money at low Home Loan interest rates  which not only helps one afford their dream home but also helps them keep their EMIs affordable. Home Loans also come with tax benefits and help one save a lot of money. Further, housing loans come with a long repayment tenor, which further makes the process of repaying them easy. If you are planning to buy a home anytime soon, apply for a Home Loan in advance. Pre-approved Home Loans come with many benefits and make the entire process of buying a home much simpler.

However, do keep in mind that pre-approved Home Loans stay valid only for 6 months and therefore if you do not plan to purchase a property any time soon, do not go for a pre-approved housing loan. Further, if you are going for such a loan, make it a point to negotiate hard with your lender and get the lowest Home Loan interest rate possible.

*Terms and conditions apply.

Also Read: Factors to Consider Before Applying for a Home Construction Loan