When you purchase a residential property or construct a house \u2013 availing a home loan with the best deals should be your top priority. After all, a home loan may be your longest financial commitment, which will have an impact on your current and future financial planning. However, deciding on the best financial institution to avail this credit from becomes tricky, given the market’s competitive nature.<\/span><\/p>\n

With the exponential rise in credit share of NBFCs since 2015, the number of such loan options available to borrowers has increased over time. Owing to this growing trend, you’ll come across reputed NBFCs offering home loans with attractive benefits. However, while availing a home loan, you must know the various factors that set the NBFCs apart from the financial institutions.<\/span><\/p>\n

Let\u2019s have a look at their differences and then choose your lender accordingly \u2013<\/span><\/p>\n

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  Difference Based on Interest Rates<\/b><\/span><\/p>\n<\/li>\n<\/ul>\n

  Financial institutes determine the interest rates on a loan based on MCLR (Marginal Cost of Lending Rate), which serves as a benchmark for lending and is monitored by the Reserve Bank. On the other hand, NBFCs and financial institutions offer home loan interest rates after adding a margin over the prevalent MCLR. NBFCs offer more beneficial terms to borrowers and as such are more willing to adjust to any reduction in the lending rates in comparison to other financial institutions. A borrower can benefit from such borrower-friendly features from an NBFC. <\/span><\/p>\n

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    Difference Based on Eligibility Criteria<\/b><\/span><\/p>\n<\/li>\n<\/ul>\n

    As paperless financial technology has gained prominence, lenders increasingly depend on CIBIL scores to determine your <\/span>housing loan eligibility<\/u><\/span><\/span><\/a>. While PLR and MCLR set the upper caps on interest rates \u2013 the interest rate you pay is linked to your CIBIL score. Here\u2019s how a credit score can determine your home loan EMIs.<\/span><\/p>\n

    Leading financial institutes offer their best lending rates to customers with a credit score of 700 or more. However, NBFCs have less stringent home loan eligibility criteria and provide home loans to customers with relatively lower credit scores.<\/span><\/p>\n

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      Difference Based on the Loan Amount<\/b><\/span><\/p>\n<\/li>\n<\/ul>\n

      Financial institutions allow LTV (loan to value) ratio of up to 80% of the property\u2019s value based on present market value. But keep in mind, your property\u2019s actual cost goes up during acquisition from other costs such as \u2013<\/span><\/p>\n

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        Stamp duty<\/span><\/span><\/span><\/p>\n<\/li>\n

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        Registrations <\/span><\/span><\/span><\/p>