As you may have noticed….
Nowadays, Housing Finance companies present a lot more than just than Loans…
Does this make sense to you?
Back to what I was saying…
People’s Housing need has seen explicit increasing from past few years as the population grows, middle class expands and more youthful age choose to move into atomic family nearer to their work hubs.
But here's the thing
Due to High financial cost and little savings people are still confused?
Are you also confused? Don’t worry.
Here's the thing: the concept of Housing finance companies in India are widely available from past few years.
There are dozens of banks and Non-Banking Financial Companies in India that offer housing finance. You can get these loans easily and repay every month.
Housing Finance Companies in India: Background
With prices of real estate soaring across India over the last few years, buying a house can be tough for most salaried people.
However, this need not throw a wet blanket on your dreams of owning a home. Dozens of banks and NBFCs across India are making the dream of owning a home come true for millions of people every year.
This includes people from low to high-income groups, who cannot afford to make a one-off payment to buy a house.
Also Read: 13 Key Difference Between NBFC and Bank
Housing Finance in India
The pioneer of home loans in India is an NBFC called Housing Development and Finance Corporation.
Nowadays, it goes by the popular acronym, HDFC.
This NBFC financed millions of homes across the country at a time when many banks and other finance companies were unaware of the huge potential of the home loans market.
Over the last two decades, several banks and NBFCs have joined the bandwagon and now offer housing finance at very competitive rates.
Here we look at the top 10 Indian banks and NBFCs that offer housing finance across India
Top 10 Housing Finance Companies in India:
To assist to avail housing finance, we list top housing finance companies in India. This list is not comprehensive and is purely for education purpose only.
The listing is not meant to serve as an indicator of the popularity of any bank or NBFC, its interest rates, lending policies or any other considerations for home loans.
It is therefore advisable to study the market and various options of housing finance providers to patronize one best suited for your needs.
1) State Bank of India
Government-owned lender State Bank of India is a top player in the home loans segment. SBI home loans are available to non-SBI customers too.
Over the years, SBI has emerged as a leading player in housing finance since it has a nationwide reach through nearly 25,000 branches in urban, semi-urban and rural areas.
Private lender, HDFC continues to hold its leading position as India’s foremost housing finance company.
Based in Mumbai, HDFC home loans are now also available through the wide network of offices as well as branches of its eponymous bank.
HDFC caters to people of all income groups. The company also approves properties that are eligible for its finance, to shorten the loan sanction process.
3) PNB Housing Finance Ltd
Public Sector Undertaking (PSU) Lender, Punjab National Bank has created an NBFC, especially for housing finance. Called PNB Housing Finance Ltd, the company offers housing loans at very competitive interest rates. And it’s the best Housing finance company in India.
PNB Housing Finance Ltd’s home loans can be applied through Punjab National Bank branches and some of its banking affiliates.
4) LIC Housing Finance Ltd
The state-owned insurer, Life Insurance Corporation of India also operates a specialized NBFC for providing home loans Called LIC Housing Finance Ltd which is also a major player in Housing finance sector in India.
The company is very popular among homeowners since it also offers various insurance products that can be linked to home loans.
5) Can Fin Homes Ltd
Can Fin Homes Ltd be the housing finance NBFC sponsored by PSU lender, Canara Bank? It was established in 1987, to mark the ‘International Year of Shelter for the Homeless.’
The company operates across India through some 132 branch offices, 20 ‘Affordable Housing Loan Centers’ and 20 affiliate offices.
According to its website, Can Fin Home’s majority- 70 percent – home loan customers are located in south India while the remaining 30 percent are in other parts of the country.
6) Indiabulls Housing Finance Ltd
Indiabulls Housing Finance Ltd. (IBHFL) ranks as the second largest private housing finance NBFC. It is regulated by the National Housing Bank (NHB).
IBHFL website says, the company has serviced over a million customers, and has cumulatively disbursed home loans of over Rs. 167 trillion till the financial year 2016-2017.
7) ICICI Bank
Private sector lender ICICI Bank has helped thousands of Indians fulfill their dreams of owning a home.
ICICI Bank home loans can be applied online through its website or from over 1,000 branches of the bank nationwide.
ICICI Bank also offers housing finance through its affiliate bank network and offices in foreign countries for Non-Resident Indians.
8) L&T Finance Ltd
Engineering giant Larsen & Toubro (L&T) has entered the real-estate market in a grand way. L&T now builds properties in major cities and satellite townships in India.
Additionally, the company has launched its eponymous NBFC to offer housing finance. L&T Home Finance offers home loans for properties developed by L&T as well as other builders.
You can apply for L&T Home Finance loan online or through its network of branches across India and affiliate offices.
9) Bank of Baroda
PSU lender Bank of Baroda offers housing finance on very attractive terms and interest rates. Baroda Home Loans, as the product is called, is available for new properties as well as buying existing houses from resellers.
You can also get housing loans from Bank of Baroda for buying land and building your home, like all other housing finance providers.
10) SVC Bank
In cooperative banks sector, Shamrao Vitthal Cooperative Bank, also known as SVC Bank is a fast emerging player in housing finance.
SVC Bank home loans can be applied online or through its network of branches as affiliate regional rural banks, among others.
The bank offers some of the lowest interest rates in home loan segment.
Requirements for Housing Finance Companies in India
Should you wish to avail home loans, there are some basic requirements that are to be fulfilled.
- KYC Documents: Generally, Aadhar card, Permanent Account Number, valid Indian passport and a variety of documents issued by the Indian government or state governments are used for Know Your Customer formalities required to avail housing finance.
- Bank Statements/ Passbook Copies: A housing finance provider will require your bank statements or copies of your bank passbook clearly indicating salary or income over a period of six months or more.
- Employer’s Certificate: Home loan providers have a list of approved companies. If your employer is included in this list, it is easier to get housing finance. Otherwise, the bank or NBFC may have to verify credentials of your employer. You may be asked to submit an employer’s certificate that indicates the date of your joining the company, designation, and
- Employer Credentials: Most banks and NBFCs do not ask you to provide an employer’s credentials. In some instances though, you may have to submit details of your employer such as year of opening business and copies of licenses from various authorities that regulate the business.
- CIBIL Score: This is a creditworthiness rating in India. Before offering you a home loan, the bank or NBFC will check your CIBIL score by checking details on your PAN for any defaults, unpaid or existing loans. If you have no liabilities, your loan will be processed. A negative CIBIL score means your housing finance application will be rejected.
The basis of Calculating Home Loan
Usually, housing finance is calculated on basis of your income, liabilities, outgoings, and age. There are various factors that come into play.
Some banks and NBFCs offer home loans for people up to their age of 70 years, though the tenure may be shorter.
Lenders will want to see you repayment capabilities before granting a home loan. If needed, you can apply for housing finance jointly with spouse, siblings or parents to get a higher amount.
Repaying Home Loans
All home loans are to be repaid through Equated Monthly Installments. This means the lending bank or NBFC will calculate the principal amount of the loan and interest payable over the loan tenure.
This will be divided into equal parts that are to be paid every month.
There are two types of interest: Fixed and Floating.
EMIs with fixed interests means you pay a particular amount every month. Floating interest means your EMI amount can increase or decrease depending upon the Marginal Cost of Lending Rate (MCLR) which is fixed by Reserve Bank of India after every three months.
Generally, all housing finance providers offer fixed rate EMIs for only a limited number of years, after which you are automatically migrated to the floating rate system.
Guarantors and Collaterals for Housing Finance
Usually, banks and NBFCs do not require guarantors or collaterals while giving a home loan: the property they finance is their collateral.
This means the lending bank or NBFC has legal rights to your house, till the home loan is paid in full.
Transferring Home Loans
You can transfer an existing home loan from one bank or NBFC to another one, with prior approval from both parties.
In such cases, you will have to pay some processing fees. However, transferring a home loan should be done only after careful consideration of costs involved, including interest payable and a number of years.
It is advisable to consult a financial advisor before transferring a home loan to ensure you do not lose money.
Early Repayment of Housing Loan
This is something you need to study well before applying for housing finance. Find out from the bank or NBFC about benefits you get for settling a home loan before its tenure.
Since banks and NBFCs profit from the interest you pay, some may not allow early repayment without charging at least part of the interest they would have gained from more EMIs.
It is advisable to get the early repayment clause clearly mentioned in your housing finance contract.
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Getting housing finance in India is fairly easy. However, it is advisable to take home loan earlier in your working life.
This way, you can repay it faster and invest your future earnings into other high-return products such as stocks, Mutual Funds, Systematic Investment Plans and other options like pension plans.
Before concluding, we emphasize that banks and NBFCs will only provide housing finance to properties that meet or exceed their standards and specifications.
This means the property you are planning to buy should not be older than a specific number of years. Additionally, the construction should be legal- meaning you or other the builder should possess the required permits and licenses to develop the property.
Compliance with fire safety and environmental safety is also required. You may have to procure these documents or get copies from a builder to avail housing finance.
Banks and NBFCs regularly hold ‘home loan meals’ or special events when they offer special rates of interest to applicants or those who register for housing finance during that period.
You can attend any ‘home loan fair’ or meal where several banks and NBFCs complete with one-another to offer best rates and repayment schedules.
With almost every PSU bank and more than 20 assorted NBFCs offering housing finance, there is intense competition in the market.
Keeping in mind that most home buyers need housing finance, from the top housing finance companies in India where the reputed builder's tie-up with banks and NBFCs to arrange loans.
Buying a home from pre-approved builders can save you some time and possibly, a little money too.
We hope our guide will help your experience to be pleasurable, profitable and fruitful.