Pre-approval

Why is Pre-Approval Important When Seeking Financing?

Loan Pre-Approval is essential, especially for home/mortgage loans.

Every bank has its own risk policy and corresponding requirements for the profile of potential loan applicants (or borrowers). Depending on these requirements and the extent to which the client meets them, the parameters of the requested loan are determined—the amount, the term, and whether or not any kind of collateral is required, such as a salary transfer, the requirement of a co-borrower (or co-signer), or a guarantor.

One of the main requirements based on which the creditor bank assesses whether to grant the desired loan is whether the applicant has been a regular payer on already repaid or existing credit obligations. Credit obligations include all types of loans from bank and non-bank financial institutions, credit cards, leases/hire purchases, instalment plans (for goods), overdraft facilities, etc.

Before documents are submitted for a loan at a bank branch, your credit consultant, based on the objective information you provide, will give you the closest possible forecast as to whether, and under what parameters, you will be approved for the loan you want.

This preliminary assessment will save you from potential delays or postponement of the loan application in the future due to additional bank requirements or an outright refusal.

Home/Mortgage Loans

Pre-approval for home and mortgage loans is an even more critical step that every client should take.

When applying for a home/mortgage loan, it is not mandatory to have already selected a property to request pre-approval.

You can provide your client profile data to check your creditworthiness (or solvency). After reviewing your income and existing obligations, the creditor bank approves the potential client for a specific loan amount. The approval is usually valid for six months.

During this term, the client can search for the property they desire. If a preliminary purchase agreement (or preliminary contract of sale) is signed, you as the client, will have the peace of mind of having secured financing.

Upon signing a preliminary contract, a deposit (or earnest money) is usually paid to the seller (typically 10%), which you could potentially forfeit if the loan approval is delayed or if the loan is not granted to you. Pre-approval gives you the certainty that this will not happen.

The property that will serve as collateral for the future loan must also be approved by the bank. The percentage of financing depends on the type of property, its age, location, and other factors.

Quite a few banks offer the “Pre-Approval” service. With our assistance, you can quickly and easily take advantage of this benefit.

Personal Loans

The credit intermediary (or credit broker) can provide you with an additional opinion on the parameters of your loan and a forecast on whether you would be approved.