My bank gives me a pre-approved Rs 85 lakh house loan, but I have no money. Can I spend Rs 80 lakh on an apartment?

 My bank gives me a pre-approved Rs 85 lakh house loan, but I have no money. Can I spend Rs 80 lakh on an apartment?

The amount of the property's worth that may be funded with a loan is determined by extremely explicit loan-to-value limitations imposed by the RBI.

I don't have any funds, but I want to buy an apartment for Rs 80 lakh. On the other hand, my bank is providing me with a Rs 85 lakh pre-approved house loan. Can I purchase an apartment and begin making EMI payments? I am 35 years old, and my monthly salary is about Rs 1 lakh. Is obtaining a house loan for 80% of the total flat cost a requirement as well? Why can't I receive a 100% house loan when my CIBIL is around 750? Kindly provide guidance.  

I'll divide this into three parts. First, the RBI has put very explicit limitations on the loan-to-value (LTV). The amount of the property's worth that may be loaned money is determined by these limitations. The maximum LTV ratio for residential loans up to Rs 30 lakh is 90%. This implies that a minimum 10% down payment is required, and you may finance up to 90% of the property's worth via the loan. The LTV ratio may be set at 80% for house loans above Rs 30 lakh and up to Rs 75 lakh; for home loans beyond Rs 75 lakh, the LTV ratio may be restricted to 75%, and a minimum 25% down payment would be required. The lender may not give you the full LTV; these are the maximum LTV permitted. 

Secondly, obtaining pre-approval does not guarantee that you will be granted the full loan amount. It simply indicates that you are deemed qualified for a loan up to a certain amount by the bank. You will be assessed once you apply for a house loan based on your income, current indebtedness, and outstanding obligations. You will be able to get approval for the house loan depending on the evaluation of your property as well. The amount that is pre-approved could be much less than this. Generally speaking, a house loan that is up to 4-4.5 times your yearly wage may be obtained. The bank will only let you take out a maximum of 30–40% of your salary as EMI. 

Thirdly, the price of a property does not equal its cost. Additional costs include those related to furniture and fittings, processing, legal expenses, society membership fees, registration and stamp duty, etc. These are not covered by the loan, therefore you will need to budget around 15% of the value of your house for them. You will still need personal cash to cover these expenses even if you choose an NBFC that incorporates a portion of these charges in the loan LTV. You will not get a loan equal to 100% of the value of your property.