Home Loan Offered By NBFC in India: What are the Advantages

Updated: Wednesday, December 15, 2021, 13:57 [IST]

There are two alternatives available to you if you want to buy a property with a home loan. A bank loan or a loan from a Non-Banking Financial Company are also options. NBFCs or Non-Banking Finance Companies are growing their presence rapidly in multiple domains from simple fixed deposits to Home loans, NBFCs are doing great.

However, NBFCs are not permitted to accept deposits from the general public as banks, they are exempt from many of the banking laws that regular banks must adhere to. They can, however, underwriting services, provide loans, Fixed Deposits and credit facilities, among other things. Home loans are also available through NBFCs, which may be utilised to buy, expand, or remodel a property or house you are living.

When it comes to taking out a large loan for their home, most consumers prefer banks to NBFCs. However, understanding how the two institutions grant funding and the varied criteria they use would be beneficial.

India is a growing market of NBFCs. In the previous few years, the market has witnessed immense growth in NBFCs. They are growing rapidly, making their service available to millions of customers through their branches spread across the nation. Somehow, they are helping the market to grow and also helping the customers who don't have access to banking services in their locality.

List of NBFCs That Offer Home Loans In India

Reliance Capital
L&T Finance
Indiabulls Housing Finance Ltd
Mahindra Rural Housing Finance Ltd.
Sundram Home Finance Ltd
LIC Housing Finance Ltd
Tata Capital
HDFC (Housing Development Finance Corporation)
Muthoot Homefin
Bajaj Housing Finance Ltd

Before going for a home loan to any of the above or any other NBFC, do some research and look for the interest rates rate that fulfils your requirements. Interest rates by NBFCs on home loans come in a variety and require research and understanding to choose the right one.

Advantages Of Home Loan From NBFCs

Fast processing - It takes a long time for a bank to complete a home loan. However, this is not the case with NBFCs. NBFCs handle loans more quickly than banks.

Minimal documentation - When compared to banks, NBFCs demand far less documentation for house loans. This also indicates that your loan request has a better possibility of being granted.

Less strict - When it comes to granting a house loan, banks are normally more strict. When it comes to granting a house loan, NBFCs, on the other hand, have a less demanding approach.

Competitive Interest rates - Because of the fierce rivalry in the home loan sector, NBFCs are required to maintain interest rates low. Not only does this imply that the interest payable will be minimal, but it also means that the loan's EMI will be lower.

Smooth loan disbursement - All of the aforementioned factors contribute to faster loan disbursement. This implies you won't have to wait months to get a mortgage. When it comes to NBFCs, the procedure is often fast.

Even low credit individuals can - NBFCs are receptive to the concept of lending money to consumers with poor credit scores. It should be emphasized, however, that persons with a poor credit score will face higher interest rates.

Less laws and regulations - Borrowers will have easier access to home loans, and the approval procedure will be less complicated. It is important to note, however, that the loan amount given will be smaller than that of a bank. This is because the scant rules imposed on NBFCs have resulted in an increase in loan defaults.

Bottom Line

The RBI has a direct relationship with banks, which offer home loan interest rates based on the MCLR (Marginal Cost of Lending Rate). The MCLR-linked interest rate means that as the MCLR changes, so does the interest rate. It has the potential to increase or decline. Banks, on the other hand, follow a transparent approach and openly state the time intervals at which the interest rate can fluctuate.

NBFCs, on the other hand, are not regulated by the RBI and charge interest rates based on the Prime Lending Rate (PLR). If you have a strong credit score, you may work out a deal with the lender to have the loan approved at a low-interest rate.

In recent years, NBFCs have grown in popularity, and clients are more aware of the two alternatives available to them.