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!
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