NBFC Home Loans
An NBFC home loan offers flexible financing for home buyers, with easier eligibility norms and competitive interest rates. Unlike banks, NBFCs operate with more freedom, making them a popular choice for faster and hassle-free housing loans.
NBFC Home Loans: The Smart Way to Finance Your Home
Planning to buy your dream home but confused between a bank and an NBFC? This guide will help you understand everything about an NBFC home loan in India—covering interest rates, benefits, and the top NBFCs you can consider.
List of NBFCs Providing Housing Loans in India
Choosing an NBFC for home loan has become a popular option among borrowers because of competitive rates and easy accessibility. Below is a list of leading NBFCs in India that provide housing loans:
1. HDFC (Housing Development Finance Corporation)
HDFC, with over 300 outlets across the country, is a pioneer in providing housing loans in India. Their extensive network, excellent customer service, and longstanding history in lending make them one of the top choices for housing loans.
2. Reliance Capital
Established in 1986, Reliance Capital is one of India’s leading NBFC Home Loans. It boasts an extensive network and is known for offering competitive housing loan options.
3. Tata Capital
Tata Capital is a trusted name in the financial sector, offering a range of services, including home loans, with a focus on customer satisfaction and competitive offerings.
4. L&T Finance
L&T Finance is another major player in the market, serving over 10 lakh individuals with a wide range of financial services, including home loans.
5. Navi Loans
Navi, with its innovative approach to finance, provides accessible and customer-friendly housing loan solutions.
6. Mahindra and Mahindra Financial Services Limited (MMFSL)
MMFSL, with over 1,000 branches nationwide, offers various financial services. It also has a subsidiary, Mahindra Rural Housing Finance Limited, specializing in home loans.
7. Indiabulls Housing Finance Limited
Indiabulls Housing Finance is one of the major financial organizations in the country, offering mortgages at competitive rates and building a large customer base.
8. PNB Housing Finance Ltd
PNB Housing Finance Ltd is known for its diverse housing loan products and commitment to customer service, making it a go-to choice for many homebuyers.
9. Sundaram Home Finance Limited
Established in 1954, Sundaram Home Finance Limited provides various financial services, including housing loans, to over 1 lakh clients through its 550+ branches across India.
10. LIC Housing Finance Limited
LIC Housing Finance is known for its impeccable customer service and competitive housing loan products, making it a popular choice among home loan customers.
11. Muthoot Homefin
Muthoot Homefin is a reliable option for home loan customers, offering competitive pricing and transparent policies. It has a wide network across the country for customer accessibility.
Whether you prioritize competitive interest rates, expansive branch networks, or exceptional customer service, these NBFCs cater to a variety of preferences, ensuring that you can find the perfect housing with the NBFC home loan interest rate option that suits your needs.
| NBFC Home Loans | Interest Rate | Maximum Loan Amount |
| HDFC | 8.50% Onwards | Up to 75% on loans above Rs. 75 lakh |
| Reliance Capital | 9.75% Onwards | Up to Rs. 5 Crores |
| Tata Capital | 8.95% Onwards | Up to Rs. 5 Crores |
| L&T Finance | 8.60% Onwards | Up to Rs. 7.5 Crores |
| Navi Loans | 8.60% Onwards | Up to Rs. 5 Crores |
| Mahindra Finance | 8.50% Onwards | Up to 75% on loans above Rs. 75 lakh |
| Indiabulls Housing Finance Limited | 9.30% Onwards | Up to Rs. 5 Crores |
| PNB Housing Finance Ltd | 8.60% Onwards | Up to 75% on loans above Rs. 75 lakh |
| Sundaram Home Finance Limited | 6.90% Onwards | Up to 75% on loans above Rs. 75 lakh |
| LIC Housing Finance Limited | 8.65% Onwards | Up to Rs. 15 Crores |
| Muthoot Homefin | 10% Onwards | Up to 90% on loans under Rs. 30 lakhs
Up to 80% on loans above Rs. 30 lakhs and under Rs. 50 lakhs |
Advantages of Opting for an NBFC Home Loans
1. Expedited Processing
While traditional banks are often notorious for their lengthy loan processing times, NBFCs offer a distinct advantage in this regard. Non-banking financial Companies are known for their swifter processing of housing loans.
2. Minimal Documentation
Another compelling reason to consider some of the top NBFCs for home loans is the significantly reduced documentation requirements compared to banks. This streamlined process increases the likelihood of your loan application being approved.
3. Flexibility
Banks tend to have stringent criteria for approving home loans, making it challenging for some applicants. In contrast, NBFCs offer a more flexible approach, facilitating a smoother home loan approval process.
4. Speedy Disbursement
The efficiency mentioned earlier also translates into faster disbursement of the loan. With NBFCs, you won’t have to endure months of waiting to secure your home loan; the process is generally expedited.
5. Competitive Interest Rates
The intense competition within the home loan industry compels NBFCs to maintain competitive interest rates. This not only results in lower interest payments but also eases the burden on your loan’s Equated Monthly Installments (EMIs). In many cases, NBFCs offer interest rates lower than those offered by banks.
6. Accessibility for Lower Credit Scores
Banks often require a pristine credit score for loan approval. In contrast, NBFCs are more open to extending loans to individuals with less-than-perfect credit scores. However, it’s important to note that interest rates may be slightly higher for those with lower credit scores.
7. Fewer Regulatory Constraints
Unlike banks, NBFCs operate with fewer regulatory restrictions. This translates to a simplified approval process and greater accessibility for borrowers. However, it’s important to understand that the loan amount disbursed by NBFCs may be lower due to the relatively relaxed regulations, as defaults tend to increase under these circumstances.
Banks VS NBFCs: What is the ideal preference for Home Loans?
Choosing between banks and NBFC Home Loans depends on your personal financial needs and repayment capacity. While banks follow stricter norms, NBFCs often provide more flexibility and faster approvals. To find the best NBFC for home loan, it’s important to compare their interest rates, eligibility criteria, and customer benefits against banks before making a decision:
| Aspect | NBFCs | Banks |
| Services Offered | Primarily focus on various types of loans, including home loans. | Offer a wide range of banking services, including savings and current accounts, deposits, and loans. |
| Regulations | Regulated by the Companies Act. | Regulated by the Reserve Bank of India (RBI) under the Banking Act. |
| NEFT Prepayment | Typically accept only cheque payments for prepayment. | Offer NEFT prepayment options, widely available to all customers. |
| Interest Rate Calculation | Determine interest rates based on factors like property value, applicant’s creditworthiness, and other variables. | Generally follows a fixed range of interest rates for all applicants, often tied to the base rate plus a margin. |
| Overdraft Facility | Usually do not offer overdraft facilities. | Some banks provide overdraft facilities, allowing customers to withdraw more money than they have in their accounts up to a certain limit. |
| Interest Rate | Interest rates can vary based on factors like the property’s value and the applicant’s financial profile. | Banks typically offer a fixed range of interest rates that apply to all applicants. |
| Loan Approval Process | Tend to have a comparatively stricter loan approval process, which may require more documentation and scrutiny. | Generally have a comparatively easier loan approval process with a standardized set of criteria. |
| Disbursement Time | Known for faster loan disbursement. | Loan disbursement from banks tends to be slower in comparison. |
Ultimately, the choice between a bank and an NBFC Home Loans should be based on your specific financial needs and circumstances. If you require a speedy loan approval and disbursement process, an NBFC may be a better option. However, if you prefer a wider range of banking services and are comfortable with potentially more rigorous approval processes, a bank could be the right choice.
Important Considerations Before Obtaining an NBFC Home Loans
Choosing an NBFC bank home loan can provide several advantages, but it’s important to compare the benefits with possible drawbacks before applying. Here are some key factors you should consider to make an informed decision.
1. Interest Rate System
Banks usually follow the MCLR (Marginal Cost of Funds Lending Rate) system, which ensures more transparency and stability in interest rates. In contrast, most NBFCs use the prime lending rate system, which can lead to slightly higher or fluctuating interest rates. However, some of the best NBFC for home loan options balance this with flexible lending terms.
2. Benefit Pass-On from RBI Policy Changes
Banks are mandated to pass on RBI’s rate cuts to customers, making EMIs more affordable when interest rates fall. NBFCs are not bound by this rule, giving them flexibility in setting the NBFC bank home loan interest rate. This can work both ways—sometimes offering competitive deals, but not always reducing rates in line with RBI changes.
3. Overdraft Facility
Banks often provide an overdraft facility, allowing borrowers to use surplus funds linked to their accounts. NBFC bank home loan products typically don’t include this feature, but they compensate with faster approval and simpler processes.
4. Documentation and Regulations
If you’re looking for easier NBFC home loan eligibility, NBFCs have more relaxed documentation requirements compared to banks. They are often willing to extend loans to applicants with lower credit scores. This makes NBFCs a popular choice for self-employed professionals and first-time borrowers.
5. Approval Rates
NBFCs usually have higher approval rates thanks to their flexible policies and smaller customer base. They are more eager to lend, making it easier for many borrowers to secure a home loan from NBFC. However, always assess your repayment capacity before committing.
6. Research and Evaluation
Before finalizing, compare multiple lenders. Look into the NBFC bank home loan interest rate, repayment terms, and total cost of borrowing. Choosing the best NBFC for home loan depends on your income, credit score, and long-term financial goals.
How to Apply for an NBFC Home Loans: A Step-by-Step Guide
Applying for a house loan through a Non-Banking Financial Company (NBFC) is simple if you follow the right steps. Many borrowers today consider NBFCs as the best NBFC for home loan options due to their flexibility, competitive rates, and easier eligibility norms. Here’s the process explained in order:
Step 1: Submit the Application Form
Visit the official NBFC website or download their mobile app. Fill out the NBFC home loan application form with accurate details such as your income, employment, and personal information. Upload the required documents, including ID proof, address proof, income proof, and property papers.
Step 2: Pay the Processing Fee
Once your application and documents are submitted, you will need to pay a processing fee. This covers the cost of reviewing your loan request.
Step 3: Verification and Eligibility Check
The NBFC will verify your details and assess your NBFC home loan eligibility based on credit score, income, and repayment capacity. This helps determine if you qualify for the loan and what amount can be sanctioned.
Step 4: Receive the Sanction Letter
If approved, the NBFC issues a sanction letter. This document mentions the loan amount, tenure, NBFC bank home loan interest rate, EMI, and other terms. Review it carefully before proceeding.
Step 5: Property Document Verification
The NBFC will verify the property-related documents to ensure the property is legally valid, dispute-free, and compliant with regulations.
Step 6: Site Visit and Legal/Technical Checks
Some NBFCs may conduct a site inspection and legal/technical evaluation to confirm the property’s construction quality and legal status.
Step 7: Loan Agreement and Disbursement
After successful verification, you will sign the NBFC bank home loan agreement. The loan amount will then be disbursed, usually directly to the property seller or builder.
