In your quest to purchase your dream home, the decision between a traditional bank and a Non-Banking Financial Company (NBFC) for your home loan is crucial. In the era of increasing accessibility through loan apps launched by Non-Banking Financial Companies (NBFCs), potential homebuyers face the dilemma of choosing between traditional banks and NBFCs.

Whether you're a first-time homebuyer or looking to switch lenders, this guide provides valuable information to help you make an informed decision and secure the right home loan for your needs.

What Is NBFC Home Loan?

NBFCs offer specific banking services without a banking license, distinguishing them from traditional banks. While they cannot accept public deposits, this exemption from certain banking regulations allows them to provide loans, underwriting services, credit facilities, and more. NBFCs, including those in India, extend home loans for various purposes, such as purchasing, expanding, or renovating properties, and providing alternative financing options to individuals.

Features of NBFC Home Loans

NBFC home loans come with distinct features. These loans often offer flexible eligibility criteria, catering to a broader range of applicants. Interest rates are competitive, and the processing time is generally quicker. NBFCs may also consider non-traditional factors for approval, making them accessible to those with unconventional profiles. Moreover, NBFCs often provide personalized services, ensuring a customer-centric approach throughout the loan tenure.

• Competitive Interest Rates: To compete with traditional banks, NBFCs provide home loans with competitive rates as low as 7.90% p.a., offering borrowers attractive interest options for their home financing needs.
• Ease of Application: Unlike traditional banks, NBFCs often have a more flexible loan application and approval process, making it easier for borrowers to secure a loan.
• Ensure Quick Procedure:  The home loan application process offered by NBFCs are seamless, require minimal documentation, offer convenience and efficiency throughout the loan journey.

Advantages of Obtaining a Home Loan with a NBFC

Obtaining a home loan from an NBFC comes with several advantages. NBFCs often provide competitive interest rates, making home ownership more affordable. Additionally, their streamlined application processes offer convenience and quick approvals. NBFCs may also be more flexible in accommodating borrowers with varying credit profiles. With an emphasis on customer-centric services, NBFCs aim to enhance the overall home loan experience for borrowers.

Faster Processing

Non-Banking Financial Companies (NBFCs) stand out for their swift processing of housing loans, offering a notable advantage over traditional banks. Their efficient procedures result in quicker loan approvals, significantly reducing the waiting period for borrowers, who can expect a faster turnaround compared to conventional banking institutions.

Minimal Documentation

When it comes to home loans, NBFCs demand significantly fewer documents than their banking counterparts. This streamlined documentation process not only simplifies the application procedure but also increases the likelihood of loan approval.

Faster Disbursement

The efficiency in processing contributes to a quicker disbursement of home loans by NBFCs. Borrowers benefit from expedited access to funds, reducing the overall waiting time associated with loan disbursement. This feature makes NBFCs an attractive option for those seeking timely financial assistance for their home-related needs.

Competitive Rates of Interest

NBFCs offer competitive interest rates on home loans. This strategic positioning not only results in reduced overall interest payments but also lightens the monthly burden of Equated Monthly Installments (EMIs). Borrowers can benefit from favourable interest rates compared to traditional banks.

NBFC home loan interest rate

Borrowers seeking home loans from NBFCs benefit from streamlined processes, quicker approvals, and less stringent documentation requirements. Evaluating the pros and cons of NBFC home loan interest rates is crucial for making informed decisions in line with individual financial situations and preferences.

Eligibility Criteria for NBFC Home Loans

NBFCs may have differing eligibility criteria, but the general prerequisites include:

• Nationality: NBFC home loans primarily cater to Resident Indians..
• Age: Eligibility criteria regarding age vary but usually encompass individuals aged 21 to 65. Salaried and self-employed applicants can apply.
• Work Experience: Salaried applicants often need  a minimum of1 year of work experience.
• Credit Score: Generally, a credit score exceeding 700 is sought. However, lower credit scores can still apply, albeit with potential increases in interest rates.

Documents Required to Apply for NBFC Home Loans

There are some necessary documents that NBFCs ask for to make the application process smooth and easy. Such documents include:

• Identity Proof: Applicants typically need to provide a PAN card, passport, Aadhaar card, or driving license as a form of identity proof.
• Address Proof: Address verification can be established through documents like a residence agreement, ration card, electricity bill, Voter ID, or Passport.
• Bank Statements: Salaried employees should present bank statements for the last 6 months,
• Business Details: Self-employed individuals need to furnish business-related documentation, including income tax returns, balance sheets, and business registration proof.
• Loan Application Form: A completed home loan application form with comprehensive details about the property's cost is a standard requirement.
• Property Documents: Essential property documents such as sale deeds, NOC, or transfers of ownership should be provided to support the loan application.

Must Explore:- Documents Required for Home Loan

How to Apply for an NBFC Home Loan: A Step-by-Step Guide

One of the most common questions is How to Apply for an NBFC Home Loan. Applying for an NBFC home loan is a straightforward process designed for your convenience. Begin by preparing essential documents such as identity and address proof. Complete the application form accurately, and submit it along with the required documentation to your chosen NBFC. Following a thorough review, the NBFC will communicate details such as loan amount, interest rates, and terms. Upon agreement, the NBFC will disburse the approved loan amount, simplifying your path to homeownership. A step-by-step guide is:

• Application Form Submission: Visit the NBFC's official website or download their app to access the home loan application form. NBFCs like SMFG Grihashakti offer a simplified application process to help you navigate your home loan journey with ease.
• Eligibility Evaluation & Verification: The NBFC will initiate the verification and approval process, assessing your creditworthiness and ability to repay the loan.
• Property Paper Verification: After receiving the sanction letter, the NBFC will conduct a thorough verification of the property documents.
• Legal, Technical, and Site Investigation: Following property paper verification, the NBFC may proceed with a legal check, technical evaluation, and site investigation to assess the property’s legal standing, construction quality, and overall suitability for financing.
• Sanction Letter: If your application is approved, you'll receive a sanction letter outlining the approved loan amount, interest rate, tenure, and other relevant terms.
• Loan Agreement and Disbursement: Once all verifications are completed, the NBFC will prepare the loan agreement, serving as a legal contract between you and the NBFC. After signing, the loan amount will be disbursed as specified, typically directly to the seller or builder of the property.

Read:- NBFC vs Banks for Home Loans: Pros, Cons & Differences

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Conclusion

Navigating the NBFC home loan application process is crucial, with procedures and requirements varying between institutions. It's advisable to review specific guidelines from your chosen NBFC and seek assistance from their customer service or loan officers for a smooth process. NBFC home loans offer benefits like a streamlined application, quick approval, quick disbursal, and often a paperless experience, making homeownership dreams more accessible. SMFG Grihashakti, being a renowned name for home loans in the NBFC sector, provides home loans and other home loan products with numerous features, attractive interest rates, and quick disbursals. Apply for a home loan with us and make your dream home a reality today!