What is meant by Pre-approved property?

Posted by Shreekant Rao on February 2nd, 2017

Now days, several builders get their projects pre-approved by lending institutions. A pre-approved property means that the concerned financial institute has verified all legal and technical documents of the project and has found them in order. So any buyer, who applies for a home loan for this property, need not get the legal verification done again.

There are several misconceptions held by borrowers related to pre-approved properties, here are a few of them:

Getting a home loan is assured: Several builders misguide customers by assuring them home loans from the financial institute which has pre-approved their project. This is not true. Each application is assessed individually and there is no guarantee that home loan on pre-approved project will always be approved.

The project will complete on time: Though the financial institute takes into consideration, the builder’s past records and ability to complete projects on time, it doesn’t mean that it will take any action if construction is delayed

The project is legally safe: Though in most cases this holds true, sometimes, small banks undermine several legal aspects and approve the project to get more business. So it’s always advisable to check which bank has pre-approved the project. A reputed bank is less likely to undermine such details which giving approval.

Less documentation is good:  Since the project has been pre-approved, the builder can directly share several documents with the bank, keeping you out of the loop. This way you are saved from the hassle of handling so many documents, but you will never get access to important documents related to the project.

You cannot take Mortgage Loan from other lenders: This is not true! Just because the project has been pre-approved by a particular bank, it doesn’t mean you have to take the loan from them. The builder may try it’s best to convince you otherwise, but you are free to take a home loan from any lender of your choice.

[Source: https://www.switchme.in/blog/2014/04/all-you-need-to-know-before-taking-home-loan/#Pre - Approved Property?]