How does Home Loan Preapproval/Presanction works
How much home loan I can get defines the total budget for the home.
A large set of customers before buying a property want to know how much they can get. Based on this information they decide which property to buy.
For this they either go and talk to vendor or looks at online calculators for eligibility. Its a good way of understanding the rough ball park figure but for those who are dependent on home loan for 80 % , shouldn’t do this.
There are many things that a Bank see before giving you an approval for home loan and the amount it will give without looking at the property.
- Net Take Home Income/Salary– Banks want to see what salary gets credited every month in your account and how much is your incentive and bonus in it.They will give you loan on the basis of your salary and will not calculate bonus and incentives.
- Cibil Record/Score – They will check cibil and see if you are not a defaulter or have a bad score.
- Your Age– Banks know its a 20 year loan and would want to see it completed within 20 years before you hit the retirement age.
Based on all above – Most Banks give you a pre approved Home Loan sanction letter.This approval is valid for three months and has the specific amount of max home loan you can get.
Once you have this approval you can go hunt the property you like and check with the Bank that is that property listed with them.If the property is listed, then you have no issues as you have a pre sanction letter and thus no worries.
