My bank told me I have got pre-approved loan. What is this? Is this good?
Often, the bank you hold an account with may pre-approve a Home Loan or Personal Loan based on your past financial behaviour. This means that if you apply for a loan for the pre-approved amount, your loan will get disbursed quickly.
Keep in mind, pre-approval may sometimes be mistaken for loan disbursal, which is not the real case. There is still a great deal of effort remaining in terms of valuation and documentation which has to be followed up meticulously. Your bank might ask you to submit documents for assessment.
Since you may already qualify for a pre-approved loan, it’s advisable to apply for the loan amount. A pre-approved loan gives you the peace of mind that your loan will be sanctioned on application.
Usually pre-approved Home Loans are valid only for 6 months. You will have to zero in on a property within that time. Note that in the meanwhile the amount approved and interest rate offered are subject to change. The final loan amount and interest rate offered depend on many factors such as your income, your Credit Score, the number of loans you have and your financial situation.
There are even cases where the lender has rejected Home Loan applications of customers who had a pre-approved loan. So, having a pre-approved loan is no guarantee that you will get the Home Loan that you want.
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