• It enables faster loan disbursal mechanism, as the sole major task remaining in the hands of the borrower is the identification of a suitable property of choice.
•This loan proposal presets a budget for the home buyer thereby narrowing down his property search.
Catches in the game:
•While this technique of getting a home loan puts away some burden off the home buyer, at the same time, it adds a fixed time frame during which the borrower has to finalize the property to be bought.
•In situation where the borrower fails to arrange suitable property during the set time frame, the loan gets cancelled and he has to go through the entire process of getting the loan all over again.
•Interest rates being related to prevalent market rates, there is always an apprehension in the mind of the borrower that in case interest rates rise during the tenor in which he is searching for property, then the borrower is set for a loss.
•A preapproved loan does not bring 100 percent assurance of the loan getting finally disbursed to the borrower. The lender always has the right to decide not to disburse the loan in case it does not find the property selected to be completely credible.