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Choosing the Best NBFC in India for Your Home Loan

With an array of financing options available to consumers today, there are always lingering concerns about which lending institution one should opt for – a bank, housing finance company (HFC) or non-banking finance company (NBFC). While most individuals and businesses still favour banks for all their banking and financing needs, HFCs and NBFCs have grown in popularity levelling the playing field. 

Borrowers normally look for convenience, accessibility and overall credit costs when selecting long-term credit such as a house loan. Let us understand the lending options and key advantages extended by NBFCs so that one might choose the best NBFC in India to fund their housing requirements. 

Features and Benefits of NBFC Home Loans

Availing housing loans from an NBFC usually comes with the following striking features:

Lower Interest Rates

Previously, the interest rates levied by NBFCs were much higher than those issued by banks. But now, you can enjoy competitive rates as a result of the RBI’s regulations to control the average base rates. 

You could also maximise the interest rate even further if you aim for a larger down payment that exceeds 20% of the property value. Typically, shorter tenors are associated with reduced interest rates as the interest adds up over the years, so choose a tenor that enables comfortable monthly repayments. 

Relaxed Eligibility

NBFCs have lenient application and approval procedures as compared to banks, which makes it easier for applicants holding lower credit scores to obtain loans, albeit at heavier interest rates. 

Swift Processing

User-friendly applications simplify the NBFC loan process with less paperwork and a shorter disbursement period. 

Higher Loan-to-Value Ratio

Borrowers need to bear stamp duty and registration fees for the property purchased using the loan funds. Some NBFCs may include these additional charges in their lending plans, unlike banks that do not cover such costs, resulting in higher LTVs.

How to Apply for NBFC Home Loans

When you apply for a home loan with any lending institution, the application process generally runs along similar lines. In the case of an NBFC, the basic steps are:

  • Go to the NBFC website or app; fill out the house loan application form correctly 
  • Pay the processing charges and submit the necessary files
  • Await initial verification and approval status
  • Once you receive the sanction letter, your property papers will be assessed; followed by site inspection, technical examination and legal certification 
  • Upon signing the loan agreement, your loan will be disbursed in no time

NBFC Housing Loan Eligibility

Although each NBFC has its own set of qualifying requirements, they are usually simple to fulfil such as:

  • Nationality: Individuals must be Indian citizens although some NBFCs accept applications from non-resident Indians
  • Age: They should be between 23 to 65 years old
  • Work Experience: Salaried persons must have at least three years of work experience whereas self-employed applicants need to show business continuity of five years
  • Credit Score: Most NBFCs accept credit scores of 750; a lower score may call for higher interest rates

Documents Needed for NBFC House Loans

NBFCs require minimal documentation from applicants. These include:

  • Identity documents like driver’s licence, passport, Aadhar card or PAN card (any one) 
  • Proof of address such as voter ID, passport, ration card, utility bill or house agreement (any one)
  • Bank statements of the last 6 months and latest salary slips (for salaried employees) 
  • Business practice licence, income tax returns, business registration, etc. (for self-employed individuals) 
  • Property papers such as ownership transfer or sale agreement 

Bank Home Loan v/s NBFC Home Loan: Which Is Better?

There are several differences between NBFCs Vs banks and each one has its merits. Borrowers can benefit from both if they know which works best for them. Selecting either one is contingent upon your financial circumstances as well as the terms and conditions proposed by the lender. Securing loan acceptance from an NBFC may be hassle-free compared to banks and might proffer other advantages that banks may not extend. Therefore, to assess the possibilities, one should account for all the credit essentials like the interest rate, tenor, loan costs and so on.  

Summing Up

Borrowers should duly note the above-mentioned aspects to pick the best NBFC in India. Since eligibility requirements and documentation may differ among NBFCs, verify these crucial prerequisites before applying. Apart from the applicable interest rates, one must evaluate their financial objectives and capabilities to secure the ideal home loan. Remember, unrealistic planning might interfere with your repayment schedule causing mental and financial distress. Additionally, any missed or delayed instalments will harm your credit score, which could hinder future loan eligibility.

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