Small value home loans

Updated on October 29, 20183 mins read

Backed by a growing demand, banks and Housing Finance companies have launched a number of products for small value home loan customers. Let’s take a look at features of these products and see if you can benefit from them too

What are small value home loans

Banks generally classify Home loans up to the value of Rs.30-35 lakhs as ‘small value’ home loans. Small value home loans are not just for low income group. In fact, there could be three reasons you go for a small value home loan:

  • You are buying a small value home 
  • You only need a small loan, since you have enough funds saved up 
  • You want to switch your existing home loan with less than Rs.30 Lakhs outstanding

Clearly there could be many reasons for you to take a small value home loan. So let’s take a look at features of some special products banks have recently launched for this segment. 

Products for customers who don’t have proof of income 

Historically, an average home loan would be about Rs.40-50 Lakhs at least. The typical customer would be a salaried individual with a steady income coming through the banking channels. Most home loan products were built around this customer base. 

But over the past few years home loan providers – especially NBFCs have been tapping into potential customers who are self employed. This base is vast but also comes with a large number of variables.

Many new home loan customers who take a low value home loan are either self employed or salaried but don’t get documents like Form 16, pay slips etc from their employer. Here are some examples of customers in this segment: 

  • Customers with low income 
  • Customers who can not provide standard documents like income proof 
  • Customers who need high loan to value 
  • Self employed professionals etc 

Here are features of products launched for those who can not provide all the necessary documents: 

  • KYC documents are mandatory
  • Maximum loan value Rs.20-35 Lakhs
  • Interest rate higher than regular home loan products 
  • Home loan tenure up to 20 years 
  • Loan of up to 85% of home value 
  • Female co applicant is mandatory 
  • Low minimum income required  

PNB Unnati, IIFL Swaraj, HDFC STAR and HDFC REACH are some products that cater to small value home loans.

Home loans for those who want a small home loan 

If you are taking a new home loan for less than Rs.30 Lakhs or switching your home loan with less than Rs.30 lakhs outstanding, you fall under the low value home loan segment. Here are some of the benefits you will enjoy:

  • High Loan to value 
    • Bank can fund up to 90% of your home cost 
  • Low interest rate 
    • Many banks offer lower interest rates to home loans less than Rs.30 Lakhs
  • Discount for women borrowers
    • Most banks offer 0.05% discount on interest rate for women borrowers

Low value home loans are an interesting proposition for all. You can even get very low interest rates and high loan value if you have documents to support your income and if you are eligible for the loan amount. 

If you want to take a new home loan or want to switch your loan, get in touch with us today!

 

 


Suma Ganesh

Suma Ganesh

Suma is an MBA in Finance and Marketing from ICFAI, Bangalore. She worked as an investment advisor to retail and high networth clients for nearly 7 years at Allegro Capital Advisors Pvt Ltd. This gave her a first hand understanding of the needs of an individual customer. With this edge, she moved on to Adi FinShiksha Pvt Ltd, where she trained financial advisors to manage their clients' investments and financial needs. With deep understanding of customers and their advisors, Suma then moved on to writing content in the space of personal finance. she is currently working as part of the content creation team at SwitchME, addressing the needs of home buyers and home loan borrowers.
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