The Pre-Approval Process For Mortgage Loan

Want quick and easy mortgage loan approval process? Then pre-approval is the path you should walk on.

With pre-approved loan offers, banks and NBFCs eliminate the need for providing multiple documents. Moreover, they offer lower interest rates, and may also process the Mortgage Loan within 24 hours. Pre-approved offers are predominantly available only to existing customers of a financial institution.

A pre-approved loan refers to funds that banks and NBFCs provide to customers based on his/her financial stability and credibility. The pre-approved limit provided by the lender for availing the loan remains valid for around 6 months.
NBFCs deliver their pre-approved offers for home mortgage loans, personal loan, EMI finance on different products and other financial services. As mentioned above, it simplifies the loan approval process and also reduces the time needed for its availing.

How does the Pre-Approval Process Work?

While some lenders may require 24 hours for completing a customer’s pre-approval process, other can take up to 7 days. The duration of the completion depends on the lender and the financial position of the applicant.

Financial institutions ascertain a pre-approved loan based on the following:

1.FOIR

The Fixed Obligations to Income Ratio is the aspect that banks and NBFCs consider before providing a loan. FOIR is calculated by dividing the summation of all fixed obligations by the customer’s total income.

The FOIR value ranges between 40 to 60% and lenders require a customer to keep their fixed obligations below 50% of their salary. Lower the FOIR, higher the chances for a customer to get an instant mortgage loan approval.

2.Credit Score

Although credit score doesn’t play a vital role when availing a mortgage loan, when pre-approving, it might become a necessity.

Banks and NBFCs need an applicant to have a credit score of 750 or above when applying for a secured or unsecured loan.

3.Employment History

A customer’s employment history can also be seen as a parameter for mortgage loan approval. Lenders check how much work experience a salaried individual has and what organisation he/she works for.

4.Business Vintage

For self-employed individuals, their business vintage is what the banks and NBFCs check. The minimal vintage a business should have for availing a Mortgage Loan Interest Rates at such a low rate is 3 years with low capitals and rates.

5.Information About the Property

Lenders will check all relevant information related to the property like its address, year of establishment, type of property, and others. Based on these parameters they will come up with an LTV ratio.

6.Assets and Liabilities

Both salaried and self-employed individuals have to provide details of their bank balance, mutual funds, bonds, stocks, life insurance policies, and others.

Similarly, they also have to provide a list of all their liabilities like outstanding debts, taxes, insurance, and others.

The Pre-Approval Process For Mortgage Loan

What are the Documents Required for Pre-Approval?

I.KYC Documents

KYC documents needed as photo ID proof include:

●Aadhaar card
●Voter ID Card
●PAN Card
●Passport
●Driving License
●Photo ID card issued by a government body
●Photo ID card issued by the employer.

Applicants only have to provide any one of the KYC documents for mortgage loan approval.

II.Address Proof

Address proof documents required include:
●Latest telephone bill
●Latest electricity bill
●Passport
●Voter ID card.

Individuals need to ensure address mentioned in the above matches their permanent one.

III.Property Proof

Documents required for property proof include:

●Registry certificate
●Sales/gift deed
●Patta
●Chain of title
●Property map
●No-objection certificate from local government authority

Applicants only have to provide any one of the documents mentioned above.

With pre-approval, the mortgage loan approval becomes even more sublime and may help the customer to avoid defaulting on it. Several banks and NBFCs provide a mortgage loan calculator through which they can make an evaluation beforehand.

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