Unlocking Your Dream Home: Benefits of Pre-Approved Home Loan Offers

Sellers often favor buyers with pre-approved loans as it demonstrates your financial readiness to make a purchase.

5 min read

Buying a new house or building a dream home is a milestone for all – and with affordable home loans, the goal is certainly achievable. However, sometimes, the loan approval process may be time-consuming, potentially delaying your plans, particularly at a time when the demand and cost of real estate are on the rise. This is where a pre-approved home loan comes in. It can reduce the wait time for your loan approval and disbursal and also put you in a better position to negotiate with the lender. Before we get to the various benefits of a pre-approved home loan, let’s find out what it is.

What Is a Pre-Approved Home Loan?

A pre-approved home loan, as the name suggests, is a loan that has already been sanctioned in principal before the deal is finalized. The process is the same as getting a regular loan sanctioned, the only difference being you need not submit any documents or paperwork related to the purchased property.

The lender offers financing depending on your creditworthiness and repayment history and issues a pre-sanction letter after a quick verification. One thing to keep in mind is that the pre-approved home loan offer comes with a 3-to-6-month tenor, within which the property deal must be finalized. However, in case you fail to do so in the given timeframe, you can re-apply. 

Top 3 Benefits of Pre-Approved Home Loan

Here, take a look at the top benefits of pre-approved home loans:

1. Faster Loan Disbursal

Since the majority of your loan verification is done at an early stage, the home loan disbursal process becomes prompt and easy once the property is finalized. You will only need to get the property documents verified at a later stage. The lender disburses the loan amount as soon as the document verification is completed. This proves beneficial when you are urgently looking for finances and need to book an apartment or house at the earliest.

2. House Hunting Made Easier

The real estate market hosts a pool of housing options, including independent homes, apartments, villas, and more. With a pre-approved home loan and pre-determined budget, the search for a suitable home becomes easier. For example, if you have a pre-approved sanctioned amount of INR 75 lakhs, you can shortlist houses or flats that cost anywhere between INR 70-80 lakhs. However, make sure you have enough savings for a down payment as it is not included in the Home Loan amount.

3. Better Scope for Financial Planning

A pre-approved home loan makes you aware of your home loan eligibility. That way, you can plan your finances accordingly and apply for a suitable loan amount that can be paid off comfortably without the fear of the loan application being rejected.

Now that you are well-versed with the advantages of a pre-approved home loan, check how to apply for one.

How to Get a Pre-Approved Home Loan Offer?

The process to apply for a pre-approved loan is no different from a regular loan application process. You can simply head to the bank’s or the lender’s website and fill out the online loan application form while providing a handful of documents to get pre-approval on your housing loan.

Documents Required for a Pre-Approved Home Loan

The documents needed to get your home loan pre-approved are listed below:

  • Identity Proof: Lenders require valid identity proof issued by the government, such as your Aadhaar card, PAN card, Voter’s ID, Driver's license, and Passport among others.

  • Address Proof: Apart from the above ID proof, lenders may ask for your ration card and utility bills (gas, water, phone, electricity bills) to be furnished as proof of address.

  • A copy of Form 16

  • The last 3 months’ pay slips

  • The last 6 months’ bank account statements

  • The last 3 years Income Tax Returns filed

  • A cheque used for paying the non-refundable loan processing fee

Note: This is an indicative list, you might have to submit additional documents as per your lender’s requirement.

Why Opt for a Pre-Approved Home Loan?

If you are still apprehensive about a pre-approved home loan, here are all the reasons why it may prove to be the best option for you.

  • With a pre-approved home loan, you will have an idea of the maximum amount you are eligible for. You can shop around and pick a property listed online by the lender.

  • Lenders offer pre-approved home loans only on properties that have already passed valuation and quality checks. Thus, you need not worry about your loan application being rejected due to poor construction.

  • There is no requirement for stacks of documents. All you need are documents related to the property, which means less time is needed for verification and approval.

  • Unlike regular loan applications, where you need to submit documents after finalizing the property, with a pre-approved home loan, you can get on with the document verification (other than property-related documents) beforehand and then search for a house or property best suited for the budget.

5 Things to Consider When Applying for a Pre-Approved Home Loan

If you are planning to get your home loan pre-approved, here are a few things you should keep in mind:

1. Effect on CIBIL Score

Before the pre-approved loan sanction, the lender will look into your CIBIL score closely. If you have a history of multiple credit card or loan applications, your CIBIL score may not be as impressive. Hence, the loan application may get rejected, which will further reduce the credit score.

2. Chances of Rejection

If you do not meet the eligibility criteria laid down by the lender and instead account for poor credit history, low CIBIL score, inadequate income, etc. then your loan application may get rejected.

3. Same Rate of Interest

The rate of interest applicable at the time you receive the pre-approved home loan offer may be the same at the time you apply. Thus, even if the home loan interest rate goes down later, you may not be able to avail of the lower interest rates.

4. Limited Property Selection

Pre-approved home loans are offered on limited properties. This may narrow down the hunt for your dream home as you would only be able to choose from the properties that are listed and have passed the quality check.

5. Limited Period Offer

A pre-approved home loan is a limited period offer with an expiry date ranging up to 6 months. Therefore, once you get a sanction on your pre-approved loan, you will have to buy a property and apply for the home loan within the validity period. 


Easy, hassle-free loan application, faster disbursal, and better negotiating power are some of the top benefits of a pre-approved home loan. And while these can be of huge advantage, a pre-approval on your home loan does not necessarily mean that the loan will be finalized. There are a dozen other factors, such as credit score, repayment history, income, property documents and so on that determine one’s home loan eligibility. However, to reap the benefits of a pre-approved home loan, it is important to complete the loan application process within the given period.

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Topics:  Loan   Home loans