Which Bank Gives Home Loans With Bad Credit in India?

A year ago, my brother’s credit score wasn’t exactly great, and he wanted to take out a home loan. To help him, I researched which bank gives home loans with bad credit in India. After exploring options, I found ICICI HFC offers loans to borrowers with low CIBIL scores. Other NBFCs also offer housing loans at low score, which I have shared below.

Which Banks that Give Home Loans with Bad Credit​?

ICICI HFC notably stands out. Their Apna Ghar and Apna Ghar Dreamz schemes offer eligibility for applicants with CIBIL scores of 650 or below.

1. It requires only minimal documentation, such as Aadhaar, PAN, and a modest account balance. 

2. These schemes aim for quick disbursal (within 3 to 5 business days) for loans up to Rs 20 lakh.

3. Beyond ICICI HFC, several NBFCs, like Piramal Capital & Housing Finance, Tata Capital Housing Finance, and IIFL Home Loans, cater to borrowers with CIBIL scores as low as 550. But they offer loans at higher interest rates starting around 9.75% to 10.5% annually.

Public sector banks such as Axis Bank, PNB Housing Finance, and LIC Housing Finance may also extend home loans to those with lower scores (around 600). Though they may require additional safeguards, like higher down payments or collateral.

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I think it will be a challenging task to find anyone who does not prefer to live in his or her own home. However, I know that the majority of locations around the nation have extremely expensive costs for apartments, flats, villas, etc. As a result, people like me must apply for a home loan in order to buy the house they want because they are unable to do so with their annual income or savings. But sometimes it does happen that we build up bad credit which leads to issues in getting a home loan and people start wondering which bank gives home loans with bad credit in India. But there is a way out of this. I will tell you.

Bad credit home loans

People need to have a strong credit score to be qualified for a house loan. However, a lot of times people don't have a positive credit history since they can't pay their debts off because of financial difficulties. It goes without saying that those with poor credit have a very tough time obtaining a mortgage. They are viewed as high-risk by banks and other financial institutions, who are hesitant to extend loans to them. Therefore, such people need to look for alternate means by which they can obtain the necessary funds for purchasing a house. Getting a home loan with negative credit is challenging, but it is not impossible.

How to Get a Home Loan with Bad Credit?

In order to raise your credit score over time if you have a low credit score, the first thing you should strive to do is pay off your bills. You can apply for a home loan jointly with your husband or wife if they have strong credit, which will improve the likelihood that the loan will be accepted. Reach a settlement with the bank or financial institution if you have fallen behind on a loan or credit card payment, pay off the settlement sum, and get a No Objection Certificate (NOC). It will be simpler for you to apply for a mortgage after you have the NOC. Additionally, make sure to verify your CIBIL score to make sure there are no errors and that it accurately reflects your most recent credit history.

Best banks for home loans with bad credit?

Accepting the bank with which you have a savings account and deposits is the best approach to obtaining a loan when you have terrible credit. They are more likely to grant you a loan because you have been a consistent customer for a time. Additionally, if you have a sizeable amount of assets with them in the form of account balances, recurring deposits, fixed deposits, etc., it will be more advantageous. Additionally, they are more likely to give you enticing interest rates.

Things to Remember When Applying for Home Loan with Poor Credit Score:

A home loan with negative credit will undoubtedly provide you with a number of benefits. But there are a lot of risks involved. Your credit score will drop even further if you don't make the payments on time, and you might then be unable to get credit at all. As a result, you must exercise extreme caution and make sure that you always pay your loan EMIs on time. To have the EMI automatically deducted from your bank account each month, you can choose auto-debit and keep it financed in advance.

This is all you need to be aware of bad credit home loans.