Property Investment Guide | 22nd November, 2023
Buying a home in a major city like Pune is a major financial decision. For most first-time home buyers arranging funds to buy property in Pune can be a daunting task. Availing of a home loan to fulfill this need is a blessing for salaried professionals and for businessmen too. This is also good business for financial institutions as they can earn profits given the demand for housing in a flourishing real estate market. It is a win-win situation in realizing dreams for home seekers and making profits for lenders at the same time. If seeking a home loan is certain then a pre-approved loan can be highly beneficial for home buyers.
A pre-approved home loan is given to potential customers who have a sound financial background. Based on the fulfillment of certain conditions in the home loan guide pre-determined by financial institutions, loan seekers are made offers to avail loans to buy homes, sometimes with perks and benefits. The pre-approved loan comes with significant benefits for the borrower as discussed below.
This can be a double-edged sword, as the borrower has a strong negotiation power with the real estate developer and other leading lenders. A pre-sanctioned letter gives the borrower the power to negotiate a good deal with the developer by instilling confidence of closing the deal.
At the same time, the borrower can negotiate better home loan deals and repayment schedules with other lenders as they already have an offer in hand. The lenders will know that the borrower is financially stable and is serious about availing the loan and will be ready to offer a better deal.
The financial institutions do thorough research into the credit history and financial background of the borrower who is offered a pre-approved loan. The loans are sanctioned faster as the layers of approvals have been reduced. This is advantageous to the borrower as they can easily secure their dream home sooner without losing out on a once-in-a-lifetime opportunity.
The interest on the home loan fluctuates with time depending on the market conditions. As a result, even a small increase in the interest rate can increase the overall cost. Some lenders offer a fixed rate of interest for the entire tenure of the pre-approved loan which can result in savings for the borrower.
A pre-approved home loan will clarify the choice of homes as the loan limit is pre-decided. The buyer can narrow down the options and choose a property that falls within the budget approved.
A pre-approved home loan eases the burden on the buyer as the financial aspect is streamlined. Also, the home buyer can be assured of a smooth buying process as most of the paperwork is taken care of.
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