Things You Need To Know

About Home Loan

Approval-In-Principle
Not many people are aware that home
loan denial can be avoided by checking
for Home loan Approval-In-Principle. Mr
Swapnil and his wife Meena spent more
than si months finding their dream
home. !rom short listing vario"s pro#ects
to selecting the ideal location$ the co"ple
finally managed to reach a good price
they deemed affordable after active
bargaining with the developers. %ith all
aspects of their dream home finali&ed$
they felt it was the right time to approach
their bank for a home loan re'"est. (he co"ple however got the shock of their lives
when the bank re#ected their home loan application d"e to low CIBIL score. A car
loan defa"lt some years back and some credit card d"es had impacted the credit
rating of Swapnil leading to the denial of home loan.
(he co"ple are not the only one who face s"ch re#ections after doing all the hard
work of short listing the property of home they are interested in b"ying. (his can be
avoided if they had Home loan Approval-In-Principle.
Approval in principle
(he concept of getting approval before hand is known as approval-in-principle which
can be taken as m"ch as one month in advance before act"al b"ying of the
property. )et "s look at vario"s aspects of approval-in-principle and its associated
advantages.
*Approval in principle+ as the name s"ggests is a pre approval for any loan
amo"nt "s"ally for ho"sing loans before the act"al p"rchase of the home. It takes
into acco"nt the credit history of the loan applicant and overall financial health and
repayment history.
In simple words approval-in-principal offers a g"arantee that the bank wo"ld
approve of a loan of the approved amo"nt when applied within a fied timeline. (he
bank however will still "ndergo all its tests and approval mechanisms at the time of
act"al delivery of the home loan.
%hat makes Approval-in-principal or AIP s"ch a significant tool is that is gives the
b"yer an eact idea of how m"ch loan wo"ld be sanctioned which can be "sef"l in
determining the overall b"dget of the ho"se. ,efore making any down payment or
commitment to the b"ilder and then finding o"t that home loan has been re#ected$
AIP gives an ass"red loan approval for a predetermined amo"nt within stip"lated
timeline.
Advantages of Approval in principle
Approval-in-Principal -AIP. offers an ass"rance from the bank that they wo"ld
sanction a loan s"b#ect to stip"lated amo"nt if applied before the deadline of one
month. In some co"ntries$ the deadline for AIP is as high as fo"r months. Indian
banks however offer AIP for a maim"m limit of / month. %itho"t an AIP loan
approval all the hard work of short listing the apartment premises$ the locality$
b"ilder$ price etc may go to waste if the bank finally disapproves the ho"sing loan.
%ith an AIP$ home loan b"yers can have a s"rety of the home loan they can avail
and "se the same to finali&e their b"dget for their dream home p"rchase.
Eligibility Conditions
,anks give an AIP only after d"e diligence check of the applicants financial
backgro"nd$ history and repayment track record. (he banks check with the 0I,I)
score before confirming any AIP. A bad 0I,I) score may lead to a denial of AIP as
well as any f"t"re loans.
Apart from financial history and repayment track record$ AIP also considers any
conc"rrent eisting loans and debt commitments. !or s"ccessf"l applicants 0I,I)
score m"st be respectable to be eligible for AIP. Altho"gh AIP offers an ass"rance for
the home loan "p to a fied amo"nt if applied within the timeline of one month$ any
lack of information or desired doc"mentation for home loan can mean denial of
home loan even after AIP.
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