It has always been noticed in real sector, confidence in builders projects have been created in customer by telling them that some banks will provide them loan. The single line “are loan to mil raha hai na , project approve nai hota to loan kyo deti bank” itself creates a good credibility of project among the buyers, after this line customer ,don’t feel any requirement for any due diligence of the project.

But the fact lies far behind these lines, No body ever try to understand the process of home loans.

The term which has been widely used in home loan sector is PRE APPROVED. Most of the time customers get confused with the sectioning of loan with the word pre – approved.

One should always remember that pre approval of a loan is not at all related with financing of a project, it is not necessary to represent the property documents in the banks to get their loan pre approved. This is done on the credibility of a customer, not on the builder, to pre – approve a loan, a bank only consider your Identity proof , address proof , your source of consistent income & some 2 or 3 more papers.

The process is being misused by the today’s builders very frequently; they use this tool to misguide their customers and to restrict them from doing any due diligence.

Any bank finances any project only when they are satisfied with the property papers of the builder.

If you have been said by your bank that “the project is in process of approval from the bank but we will pre approve your loan” then beware, because the line decodes that - builder has not submitted all the required papers to the bank .the loan will be sanctioned only when all the documents are submitted, which obviously raises a question about the authenticity of a property or project.

The validity of pre approval of loan is of 3 months, that means your loan should be sanctioned within this period, but our clever builders ask for a good amount of money which is almost 30 – 40% of the basic value of flat within a period of 3 – 4 months, now think your loan has not been approved yet (also is it not guaranteed that it will be approved by the bank.) and you have already paid 40 % of your hard earned money, now what if builder is a fraud and have intension to run away or what if it takes more then assumed time to get the builders papers approved. Who will be responsible for your hard earned money?

The solution for this is, every bank issues a unique code to every project which has been approved by them, never forget to ask your builder that unique code and to confirm it from bank.

Always remember it’s your responsibility not a builders to provide papers of property you have booked, to the concerning bank,
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  • it seems like you have a good knowledge on the subject. request to discuss the same in detail.