As real estate prices go up, many people need home loans. While banks are the usual choice for these loans, Non-Banking Financial Companies (NBFCs) are also becoming popular. NBFCs offer various home loan options with flexible eligibility and competitive interest rates.
Non-Banking Financial Companies (NBFCs) offer many financial services like loans and credit but don’t have a banking license. They are popular for home loans because they have easier eligibility rules, faster processing, and more personalized services.
While both NBFCs and banks provide home loans, there are some key differences:
Regulation: Banks are regulated by the Reserve Bank of India (RBI) under the Banking Regulation Act, 1949, while NBFCs are regulated by the RBI under the RBI Act, 1934.
Deposit Acceptance: Unlike banks, NBFCs cannot accept demand deposits.
Interest Rates: NBFCs often offer more competitive and flexible interest rates compared to banks, though this can vary.
Loan Eligibility: NBFCs generally have more lenient eligibility criteria, making it easier for individuals with lower credit scores or irregular income to obtain a loan.
NBFC home loan interest rates are influenced by various factors, including:
Credit Score: A higher credit score (750+) can help you secure a lower interest rate. NBFCs, however, may offer loans to individuals with lower credit scores at higher interest rates.
Loan Amount and Tenure: Larger loan amounts and longer tenures may result in slightly higher interest rates, as they represent greater risk to the lender.
Type of Property: The type and location of the property being financed can also impact the interest rate. For example, loans for under-construction properties may attract higher rates due to the associated risks.
NBFC Policies: Different NBFCs have their own policies and risk assessments, leading to variations in interest rates.
As of 2024, the interest rates offered by NBFCs for home loans generally start from 8.60% per annum. These rates can vary based on the factors mentioned above, as well as the borrower’s profile.
Here are some of the leading NBFCs that offer competitive home loan products:
Interest Rate: 8.50% onwards.
Processing Fee: 0.50% plus GST
Loan Tenure: Up to 20 years.
Max Loan Amount: 15 crore
Interest Rate: 8.50% onwards p.a
Processing Fee: 0.5% of the loan amount
Loan Tenure: Up to 40 years.
Max Loan Amount: 15 crore
3. TATA Capital
Interest Rate: 12% p.a.
Processing Fee: Up to 2% plus GST.
Loan Tenure: Up to 30 years.
Max Loan Amount: 5 crore
Interest Rate: 8.65% for salaried individuals
Processing Fee: Up to 3% plus taxes
Loan Tenure: Up to 30 years.
Max Loan Amount: 7.5 crore
While the exact eligibility criteria can vary from one NBFC to another, here are the general requirements:
Age: The applicant must be at least 21 years old at the time of loan application and not older than 65 years at the time of loan maturity.
Income: A stable income source is a must. Salaried individuals, self-employed professionals, and business owners can apply. The minimum income required varies depending on the loan amount and the NBFCs policies.
Employment Stability: For salaried individuals, a minimum of 2 years of work experience is generally required. For self-employed individuals, at least 3 years of stable income proof may be needed.
Credit Score: A good credit score (at least above 700) enhances the chances of loan approval and securing a lower interest rate.
Property: The property being financed must be approved by the NBFC, and it should have clear titles without any legal disputes.
The documentation process for NBFC home loans is generally streamlined but thorough. Here’s a list of common documents required:
Identity Proof: PAN Card, Aadhar Card, Voter ID, or Passport.
Address Proof: Utility bills, Aadhar Card, Passport, or Voter ID.
Income Proof: Salary slips, bank statements, ITR (for self-employed), and Form 16.
Property Documents: Sale deed, title documents, and NOC from the builder.
Employment Proof: Employment certificate or business registration documents.
And other as applicable by lender
Applying for an NBFC home loan can be done online or offline. Here’s a step-by-step guide to the application process:
Research and Compare: Start by researching different NBFCs and comparing their home loan offers. Consider factors like interest rates, processing fees, eligibility criteria, and customer service.
Check Eligibility: Use the NBFCs online eligibility calculator or speak to a representative to check if you qualify for the loan amount you need.
Prepare Documents: Gather all the necessary documents, including identity proof, address proof, income proof, and property documents.
Submit Application: Fill out the loan application form, either online on the NBFCs website or at a physical branch. Attach the required documents and submit them.
Loan Processing: The NBFC will review your application and documents. They may conduct a personal discussion or property verification.
Loan Approval: If your application meets the NBFCs criteria, you will receive a loan sanction letter detailing the loan amount, interest rate, tenure, and other terms.
Loan Disbursement: After you sign the loan agreement, the NBFC will disburse the loan amount, typically in installments, directly to the property seller or builder.
NBFCs are becoming a popular choice for home loans due to their flexibility, quick processing, and personalized service. They remain a good option, especially if you have trouble meeting traditional bank requirements. By knowing the latest RBI guidelines, interest rates, and application process, you can decide if an NBFC home loan is a good fit for you.
Yes, NBFC home loans are safe as they are regulated by the RBI and must adhere to strict guidelines.
Yes, many NBFCs offer a balance transfer facility, allowing you to transfer your existing home loan from a bank to an NBFC, often at a lower interest rate.
NBFCs typically offer a loan tenure of up to 40 years, depending on the borrower’s age and loan amount.
NBFCs generally offer competitive interest rates, which may be slightly higher than those offered by banks. However, their flexible terms and faster processing can make them an attractive option.
Yes, most NBFCs offer online application facilities, making it easy to apply for a home loan from the comfort of your home.
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