For Quick Alerts
For Daily Alerts

    Pre approved home loan: What are the benefits?


    Banks' main source of earning is the interest they earn from money lent. The more they lend the more the interest earning, subject to no defaults.

    To enhance their earning, banks are in constant lookout for customers with good credit history whom they can lend with minimum default risk.

    In this process, they pre- approve home loans for potential borrowers based on their creditworthiness. Taking a pre-approved home loan can offer you various benefits as under:

    Quick Processing Time


    Bank is done with your due diligence. Only property due diligence is left which makes the process faster.

    Pre approved home loan: What are the benefits?

    Less Hassle while borrowing

    As you are an old customer and bank has already approved the loan, there are less hassles and documentation efforts.

    Better Bargaining Power

    Once you visit the home seller with pre approved loan amount, he sees ready cash coming his way and can offer you a better deal. Bargain well while dealing with the seller.

    Buyer can focus on selecting home

    As loan approval hassles are out of sight, now you can focus on selecting home as per your choice. Time involved in loan processing can now be spent in better site selection


    Mismatch between need and amount borrowed

    As loan amount is pre-determined by the bank, it might not be in sync with the buyer's requirement.

    Spend it psychology

    Once you get the pre approved loan amount, "spend it" psychology comes to play. You get in a hurry to buy home which might decelerate the due diligence effort. Availability of easy money may prompt you to invest in costly options.

    There might be other economical options

    Getting a pre approved loan stops you from exploring other cheaper options. There might be more economical offers from other banks.

    The author Bimlesh Singh is a financial advisor. He holds a Bachelor's degree from IIT and is a CFA Level 2 candidate. He can be reached at


    Read more about: home loans
    Company Search
    Enter the first few characters of the company's name or the NSE symbol or BSE code and click 'Go'

    Find IFSC

    We use cookies to ensure that we give you the best experience on our website. This includes cookies from third party social media websites and ad networks. Such third party cookies may track your use on Goodreturns sites for better rendering. Our partners use cookies to ensure we show you advertising that is relevant to you. If you continue without changing your settings, we'll assume that you are happy to receive all cookies on Goodreturns website. However, you can change your cookie settings at any time. Learn more