Mega Developers

Exploring Housing Finance Options in India: A Guide for Indian Home Buyers



08/22/23 9:53 AM

Have no clue about how to finance your dream home? Chill we got you covered. We know  it can be quite troublesome if you are an Indian and lack knowledge about the sources to finance. A good source for financing can help you a lot to invest in the booming real estate market and give you an upperhand. The options for financing range from traditional bank loans to government schemes. There are alternative sources of funding too, providing you many choices to explore. This blog will provide you an insight into the various financing options for Indians.

1. Bank Loans: A Traditional Approach

Bank loans have always been the go-to option for home buyers in India. Banks offer different types of home loans to suit needs and financial capabilities. The most common type is a regular home loan, which covers up to 80% of the property value. These loans have an interest rate, repayment period, and eligibility criteria. It is crucial to compare loan offerings from different banks. To check factors such as interest rates, processing fees, and customer service. If you look at websites such as bankbazaar do provide a better  insight about the bank loans available and how to process it.

2. Government Schemes: Promoting Affordable Housing

The Indian government has several schemes for affordable housing. So that more people can buy houses. Some schemes are 1. Pradhan Mantri Awas Yojana (PMAY), 2. Credit Linked Subsidy Scheme (CLSS), and 3.Affordable Housing Fund (AHF). These schemes provide financial help , subsidies, and incentives to people from different sections. By using schemes people get lower interest rates and loan amounts. People also get extended repayment periods. Making purchasing a house easier.

3. Alternative Sources of Funding: Thinking Beyond Banks

Another option for Indian home buyers is to explore alternative sources of funding. Here are a few options worth considering:

a. Non-Banking Financial Companies (NBFCs):

NBFCs are financial institutions that give loans and services like banks.People with lower credit scores and unconventional incomes are also  granted home loans by these NBFCs.

b. Housing Finance Companies (HFCs):

HFCs provide home loans and related financial services. They operate like banks but focus only on housing finance. HFCs  have a faster documentation process to disburse home loan . Always choose a credible HFC before entering into any financial agreement .

c. Peer-to-Peer (P2P) Lending:

P2P lending platforms connect borrowers with individual lenders. It is different from traditional financial institutions. Loans are based on mutual agreements between borrowers and lenders at competitive interest rates. This option can be a viable option for individuals who do not meet bank loan criterias. Yet, borrowers should be cautious, read the terms and conditions before opting for P2P lending.

d. Self-Financing:

Some home buyers choose to finance their homes through personal savings, liquidating assets. This approach eliminates the need for taking loans, it may not be workable for everyone. Self-financing requires significant financial discipline and long-term planning. It is important to know the condition of your financial situation. Understand your future goals, and risk tolerance. Only then should you decide on this option.

4. More Considerations: Research and Professional Advice

Financing in a country like India has to be done after a thorough research hence you should look into some of these aspects before choosing your source of finance:

a. Interest Rates:

Compare interest rates offered by different lenders to find the most favourable option. A small difference in interest rates can affect your repayment amount.

b. Loan Tenure:

Longer loan tenures generally result in lower monthly instalments. It may increase the total interest paid over the loan’s duration. Check the pros and cons of shorter and longer loan tenures based on your financial capacity.

c. Hidden Costs:

Besides interest rates, take into account processing fees, administrative charges, and prepayment penalties. These extra costs can vary across lenders and impact the total cost of borrowing.

d. Eligibility Criteria:

Understand the eligibility criteria set by various lenders. Then assess whether you meet the requirements. This will help you identify the most suitable financing option. Choose according to your specific circumstances.

e. Professional Guidance:

Consult with financial advisors or mortgage brokers. These people provide expert insights tailored to your needs. They help to guide you through the complex world of housing finance. Helping you to make well-informed decisions.

So to conclude we can say that there are many options to choose from when it comes for financing your dream home without having to hassle much, if your credit score is an issue NBFC is the way to go besides that you have the HFCs,Government schemes etc.

We at Mega developers have always given our best to provide the best for you and your loved ones and we do want you to have your dream home without any hassle. So why don’t you get in touch with our experts today and help you on your path to owning your dream home soon.

Back to top