NBFC stands for Non-Banking Financial Company. These are not banks, but financial organizations that provide selected banking services. They don’t have a banking license and cannot accept deposits from the public, but can provide loans, credit facilities and so on. NBFCs also provide Home Loans.
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1. They process home loans faster than banks.
2. They require lesser documentation compared to banks.
3. They are lenient when it comes to approving a Home Loan.
4. Quick loan disbursals.
5. They charge lower interest compared to banks.
6. They lend money even if your credit score is not great at higher interests.
1. Rate of interest charged by banks is linked to Marginal Cost of funds based Lending Rate (MCLR). Interest rates charged by Housing Finance Companies and NBFCs are linked to the Prime Lending Rate (PLR). Banks come under the ambit of the RBI but NBFCs and HFCs don’t. They can freely set PLR. Therefore, if you fail to meet the loan eligibility criteria of banks, you can approach NBFCs.
2. Banks can fund up to 80% of a property’s value. Both NBFCs and banks are not allowed to fund stamp duty and registration costs. NBFCs take into account these costs to calculate market value of the property, so you can borrow a larger amount.
3. NBFCs are more lenient when it comes to CIBIL score vis-à-vis banks. However, they charge high interest rate. You may avail loans from an NBFC, make timely re-payments and build credit score. You could then transfer the loan to a bank.
4. Paperwork and processing is very stringent and strict, when it comes to availing a Home Loan with banks. However, NBFCs are not too strict on the same.
SEE ALSO: Home Loan Protection Plans
Following are the important documents required to avail a Home Loan:
1. Duly filled loan application form
3. Age proof: PAN card, Birth certificate, 10th marksheet, Bank passbook, Passport, Driving license
4. Address proof: Bank passbook or Bank statement, Ration card, Voter’s ID, Passport, Letter from a recognized public authority verifying residence address, Utility bills like telephone, electricity, water bills less than 2 months old, LIC policy/receipt
5. Income documents:
6. Passport size photographs
7. Property documents:
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