Relying on securing a home loan to purchase a house is the norm. However refusing home loans because of low credit score has also become frequent. Most individuals focus on improving their credit score before re-applying for a home loan. But such situations can be difficult for those who need a home loan urgently. Thankfully one need not depend only on banks to avail of home loan financing.
There are various ways to secure a home loan online as well as offline
Be prepared to either deal with higher interest rate or disbursal of smaller loan amount. Suppose an individual has a low credit score but has a stable job with an attractive income in a respectable Multinational Corporation, chances are that loan amount disbursed would be smaller than what one might be otherwise eligible for or the rate of interest would be higher. Do keep your Income Tax returns and other documentation organised and handy.
Peer-To- Peer lending websites: A simple Google search would reveal several peer-to-peer lending websites which have started up in India. P2P lending only covers personal loans. If the borrower is able to negotiate with the builder, then the initial down payment or a part of the entire payment can be funded by taking a loan through P2P lending websites.
Loan from NBFC: Non-Banking Financial Institutions cater to a segment of borrowers which are deemed risky by banks. Although one would be able to secure a loan from an NBFC, the interest rate would be slightly higher than the rate offered by a bank. But for those with an irregular income apart from bad credit history, the interest rate could go up to 19%.
Add guarantor: If one is able to add a friend or a family member with a rich credit history as a guarantor then the chances of getting a housing loan improve.
Smaller banks: There are many smaller banks which aren’t covered by CIBIL. One can be smart and can consider the same to apply a home loan.
Approach your employer: Companies, both big and small, have facilities for lending to their employees, especially if the employee has been working for certain number of years.
Loans from friends and family members: This has been the tried and tested method for several decades now. We must have all heard stories from our parents and grand-parents who used to reminisce about borrowing from friends and family members to buy their houses.
Private lenders: Unlike their portrayal in the world of cinema, all private money lenders aren’t unscrupulous. They still cater to segments which are either untouched or ignored by formal banking sector. If one is willing to carry the burden of higher interest rate, then meeting a private money lender would be a good idea.
Emergency funds: One always tends to set aside some money every month to save it for a rainy day. Well, the rainy day has arrived! By using all or some amount from this fund, the initial down payment can be taken care off.
Most of these options might be able to help you only get up to a certain amount which would be enough for the initial down payment of the house or a part of the total price of the house. One can have an arrangement with the builder to accept this amount and use the time available to improve one’s credit score.