Getting A Home Loan From Housing Finance Companies? Here Is Everything You Want To Know
The demand for home loans has seen an increase in the recent past. Since several individuals are moving to cities for work, they prefer purchasing a house there. However, inflation gets the better of the residents as house rates have soared, making it unaffordable for the common man. Precisely why people are taking up the services and assistance from housing finance companies to fulfil their dream of owning a house.
Earlier, there were few housing finance companies in India. Now, there are many companies offering housing loans to customers at competitive and attractive interest rates along with flexible terms. If you are looking to approach such companies, have proper knowledge about them.
Who are housing finance companies?
These are organisations who offer selected banking services. Nevertheless, they are not banks, as they do not hold a banking license. These mortgage providers are not allowed to accept deposits from the public. But they do offer loans, underwriting services, credit facilities, etc. One such investment is a home loan for renovation, purchase, or expansion of a plot or house.
What are the benefits for the borrowers?
- Faster processing: Home finance companies are quick when it comes processing of loan owing to the minimal documentation process
- Less stringent: The key aspects when it comes to any loan is your income, credit score, and employment. Such companies are flexible when it comes to these factors. It means there are higher chances of you getting the credit
- Disbursal: The above points favour immediate disbursal of the loan. No more waiting month long to get the house loan
- Competitive rates: Considering there is internal competition between financial institutes, especially the housing industry, housing finance companies keep their prices towards the lower end. This also reduces the EMI burden
- Easy access: Banks usually provide the loan to those who hold an excellent credit score. Other financial institutes offer housing loans to those who carry low ratings. Nevertheless, the interest rates may be higher in such a scenario
- Rules and regulations: The terms and conditions are less stringent as well. This makes availing of the house loans easier, and the approval process is less complicated too
Factors to consider before getting loans from HFCs:
- Other mortgage providers are free to set their rates, unlike the banks who need to follow RBI mandates. These companies are connected under the prime lending rate system
- Housing finance companies have a smaller customer base. Hence, the chances of the credit getting approved are higher
- Considering there are many HFCs offering housing loans, you must check factors like hidden charges, property value, etc. Generally, HFCs include stamp duty and administration charges in property value. This way you don’t spend a hefty amount from the pocket
- Evaluate your repayment capacity before narrowing down your deal with an HFC
Although it is easier to get a housing loan from the HFC, it is ideal to do your research, evaluate the pros and cons, understand the offer at hand, before accepting the scheme.