Apply for home loan


A credit score is a crucial factor that lenders take into account when you are applying for an advance. This is because holding a good CIBIL score indicates your creditworthiness and shows minimum chances of defaulting on a loan.

Therefore, borrowers with bad credit scores often find it challenging in procuring the best home loan in India, as lenders consider such applicants as risky.

However, although it might be pretty challenging to avail loans with poor credit rating, it is not impossible.

Here are some tips you can follow to avail a home loan in India with bad credit score –

[A] Apply for a joint home loan

In case your credit score is low, but your spouse holds a good CIBIL rating of 750 or above, make her the co-applicant for a joint home loan. Moreover, if your spouse has a steady income source – lenders will take that into consideration, and you might receive your loan sanctioned for a larger amount.

Besides, you can also avail of this advance with comparatively lower interest rates. Furthermore, the repayment burden is significantly reduced in the case of joint home loan offers.

Plus, you can also avail tax benefits on both the principal and interest components individually. Each of the applicants can claim tax benefits of up to Rs. 2 Lakh, under Section 24 (b) of the Income Tax Act on the interest pay-outs. Under Section 80C, each of the co-applicants can claim tax rebates of up to Rs. 1.5 Lakh on the principal components cumulatively every year.

[B] Approach NBFCs

NBFCs (Non-Banking Financial Companies) are one of the best sources to avail a home loan provided the applicant holds a poor CIBIL score.

Some of the leading NBFCs like Bajaj Finserv offer competitive home loan interest rates on their housing loans. Besides, you can also benefit from relaxed eligibility criteria and nominal paperwork.

The company also provides pre-approved offers, which lower the time taken to avail financing by making the procedure simplistic. These pre-approved offers are applicable on personal loans, business loans, home loans, and numerous other financial products. All you need to do is share a few necessary details and check your pre-approved offer.

Also, make sure to use an online Home Loan EMI calculator of your lender to calculate your monthly outgo and determine if the advance is affordable for you.

[C] Possess a stable source of revenue

Even if you possess a bad credit score, but have a steady source of income, you can still avail of the best home loan in India. Having healthy revenue proves your capability of repaying your loan on time. This is the reason why salaried professionals are often preferred over self-employed individuals.

For instance, if you are employed in a reputed government, private or corporate firm, lenders will take that into consideration. It indicates that you have minimum chances of defaulting even meeting your fixed monthly obligations.

So, for a home loan online apply, you could improve your chances of loan eligibility by keeping this aspect in mind. Alternatively, you must also be aware of the best credit score for a home loan and how to improve yours for hassle-free lending in the future.

Additional measures for borrowers with poor credit score

  • Keep these pointers in mind –
  • Repay your existing credit card bills or on-going EMIs on time.
  • Avoid applying for a higher loan amount, considering you are already a risky applicant.
  • Convert ‘settled’ accounts into ‘closed’ accounts.
  • Avoid closing any of the older accounts, as your credit score takes a severe hit due to this.
  • Check for inaccuracies in your CIBIL report from time to time.

Following these tips will help you to avail the best home loan in India. You can also appoint a guarantor with a healthy CIBIL score, as it will improve your chances of home loan approval.

Buying a house is something everyone plans and dreams of throughout their lives. And many buyers who are ready to buy a house lack funds. These buyers prefer to opt for home loans, and lenders seek a 20 percent down payment for that. Since they lack money or have low income, making payments to these lenders can be difficult for people.

After retirement, one can use his money to buy a house. But, is it a good idea to spend all the money you have earned with so much hard work all these years into buying a house?

Employees Provident Fund (EPF) is a scheme under the government that helps members of EPFO to use 90 percent of their funds for making the down payments of their new houses. Under this scheme, a person can get a loan which is of the amount 24 times more of their wages. Employees who have an EPF account for 3 years or more and also have a minimum of 20,000 account balance are considered eligible for EPF withdrawal. Under certain conditions, one can withdraw up to 90 percent of their balance to buy a new house.

When you make payments through EPF for buying a new house, you also get the benefit to avail interest payment subsidy under Pradhan Mantri Awas Yojana (PMAY).

People who are paid a fixed amount of money for their work by the employer, EPF helps them to gather funds while they’re working. The scheme is beneficial for people who are retired and currently aren’t earning money. So it is not wise to withdraw it before maturity as it can put your retirement into risk. One should keep in mind that by using the money that is supposed to give you a comfortable life after retirement for buying a house, you are leaving no funds to live a good retired life. The banks offer you home loans to buy a house but don’t lend you any loan to live your retired life.

EPF is something that helps you save money for living your life after retirement. While you are earning, you keep contributing a small amount of your salary to your EPF account. As your salary increases the contributions, you are making keeps going up. When you retire, this will help you gather enough money to live a happy retired life unless you withdraw it for some other purpose.

In India, everyone dreams of having their own house but, making such a decision of using your provident fund should be avoided thinking about the future. Many people withdraw their provident fund money for buying a house, for their children’s education, for business and other purposes and at the end lack money to pay for their daily expenses after they retire.

If you want to buy a house, you should start planning 3 to 5 years before buying and also start saving money to pay for the down payment and debt of home loan. Even if after all these years of saving money, you cannot save enough money to buy your dream house or maybe because the price increase, you can always choose to delay your home buying for another year or more.

One should always go for saving money for buying a house or taking a home loan rather than withdrawing their provident fund money. Withdrawing your EPF money should be your last option. If you go for using your EPF money, you should keep in mind to contribute the same amount back in the course of time while you are still earning. Hence, always see that you have at least 15 years left to your retirement before withdrawing so that you can again save enough EPF money.

Before going to withdraw your provident fund money, there are few provisions or conditions that one needs to keep in mind and follow. Like:

• You should have the account for at least 5 years.

• The property which you are going to buy should be on your own name.

• If the property is jointly owned, it can be only with your spouse.

• A lot of documentation and other processes are also required to go through.

• Also, the withdrawal should only be allowed if the person belongs to a cooperative society or housing society, and there are at least 10 members living in the premises or community.

• If you are employed, it is the employer who makes an application on your behalf. After verification and examining the company sends the documents to the regional EPFO office. The approval or response can come within one month, but it also depends on the EPFO office and the employer’s promptness.

But overall using your provident fund for buying a house isn’t a good decision. One should opt for taking a home loan instead of using that. Taking a home loan and getting it approved is an easy process, and you can also choose your home loan plan according to your flexibility and affordability. You can keep clearing your debt slowly with the income that you are currently earning within the given term. Under proper guidance, you can choose your desired home loan, which you can afford with low-interest rates and more benefits. It is always wise to choose to take a home loan over withdrawing your EPF money.

Experts and financial advisers have also suggested that it is better to opt for home loans or other assets or schemes instead of touching your provident fund money. Letting your EPF amount grow helps you worry less about your life after retirement and also live a comfortable content-rich retired life. You can look through the property rates, work on your financial planning, and look into all aspects while keeping your income in mind before making any financial decision.