Is the developer trying to insist you for a bank loan from its partner bank?
There is no hidden game in this insist.
But why do they insist you for such a thing?
It speeds up the process – Since the developer has a known identity with the banks, all the basic paperwork is ready and the identity of the builder is already established in the banking network. In regular times, approval of home loans take a significant amount of time but when the builder is insisting you to get the loans from the partner banks, it will definitely speed up the process.
It optimizes the developer costs – The day project starts, developers borrow money from the banks at interest rates varying from 13 to 22% and each passing day is a cost to the developer. Since the developer’s tie-up with the banks, they pre-approve their projects which lowers the costs to the developer.
Commission benefits – Every home loan transaction benefits the developer with 0.5% to 1% commission from the banks if they are pre-determined partners and that’s why they tie-up with the well-known banking brands.
It is quite tough to search out a reliable property agent who will guide a buyer throughout the process of buying a home, right from selecting a house to procuring the loan and finishing the transaction.
If you’re a possible home-buyer, the minute you step into a bank, bank personnel can tell you the way to go about the full process. Banks are undergoing a transformation. Banks are progressively providing one-stop-shop solutions for home-buyers. Home-buyers often approach banks to ask the common questions pertaining to the approval of the project for home loans.
What does it mean?
Banks scrutinize titles and documents associated with the project/property at the request of the developer. If you apply for a home loan through a similar bank, you need not go through the legal and technical verification process yourself.
Banks are extraordinarily cautious while scrutinizing projects of property developers. In construction, a risk is extremely high. If a bank approves a residential real estate project, it’s safe to assume that the developer is scrupulous and that the project is technically feasible. You can even be sure of the position of the project.
What’s there in this deal?
- If you invest in a project approved by a bank, the bank should have already checked the position and technical feasibility of your developer. Banks do legal and technical examinations double or thrice, counting on the loan amount if there’s an enormous difference in the market price of the properties given by two valuers.
- The biggest advantage of investing in a project approved by your bank is that it saves you tons of time. The credit appraisal method will be quicker because legal and technical examinations are already done.
- The approval of a bank can be a yardstick you can use to assess the credibility of a project. The approval method real estate developers undergo is long. Banks are careful and attentive while scrutinizing such projects. Banks confirm that everything is in order before deciding to stand behind a project.
Tip from BramhaCorp
Every bank releases the list of projects they have approved. The information is obtainable on their websites too. It’s forever smart to pre-check with the lender if the project you intend to invest in is approved or not, to avoid unpleasant surprises.