I am a 40-year-old single woman in need of a home loan to buy a 1-BHK house. Currently, I work as a freelance content writer. Should I approach private banks, PSU (public sector unit) banks, or NBFCs (non-bank financial companies) for the loan? What are the merits and disadvantages with each option?
—Name withheld on request
It is very much possible to secure a home loan with proper planning and consideration. Here’s how you can approach it:
Loan amount: Before applying for a home loan, assess your affordability for monthly EMI (equated monthly instalments) outgo based on your income. As a freelancer, lenders may require additional documents, such as income tax returns, bank statements, and client contracts, to evaluate your income stability. Make sure you have a set of these documents ready.
Down payment: Aim to save a substantial down payment to reduce the loan amount and enhance your chances of loan approval. Having a higher down payment can also help you negotiate better interest rates.
Lenders: You have several options to explore when it comes to lenders. These include private banks, PSU banks, and NBFCs. There are pure-play affordable players in the market, who have customized programmes especially for structuring loans and assessing incomes for informal self-employed profiles. There are many lenders (housing finance companies), who support first-time women borrowers without credit history or with informal incomes.
Interest rates and terms: Regardless of the lender type, compare interest rates, loan terms, processing fees, and other charges. Choose a loan option that offers favorable terms and aligns with your financial goals.
Seek expert advice: It may be beneficial to consult a financial advisor or loan expert who can guide you through the loan process and help you make informed decisions.
Anuj Sharma is chief operations officer, India Mortgage Guarantee Corporation.
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Updated: 05 Jul 2023, 10:36 PM IST