Micro Housing Finance Home Loan

The Indian real estate market is burgeoning. However, as the Indian home-buying market continues to grow, individuals with low income might steer away due to complex and expensive home loans. In such a scenario, a micro finance home loan offers a small ticket size and affordable interest. Moreover, since it is targeted towards low-income individuals, the approval process can suit their requirements.

You can decode micro finance home loans and gauge their suitability for your housing credit requirement through their features and benefits. Discussed below is the analysis of its features, followed by its benefits.

Features of Micro Housing Finance

• Small Ticket Size: These credit products offer a small ticket size, usually up to ₹10 Lakhs, which is suitable for affordable home purchase, renovation, and construction.

• Interest Income: The interest charged on these credit products is usually economically compared to those with high ticket sizes.

• Coverage: The loan may cover up to 85% of the property’s current market value.

• Loan Tenure: The tenure of repayment can be flexible and customised according to your needs. The loan can be paid off even within 15 days of availing the same.

Benefits of Micro Housing Finance

• Expansion of Credit: Marginalised groups and individuals with limited funds can access the micro-finance loan, provided that they meet the eligibility criteria.

• Progressive Expenditure: The limited ticket size allows progressive financing of housing improvements, ensuring fiscal prudence.

• Flexibility: The repayments and other features of these loans ensure flexibility. You can plan your credit and its pay-off as per your convenience.

• Building Credit Scores: The economic interest and ticket size provide a keen entry point for first-time credit applicants. Through regular and planned payments, they can build an optimal credit history over time.

The micro finance housing loan Equated Monthly Installments (EMIs) can be flexible and customised according to your needs. Therefore, before undertaking any loan application process, you must understand the EMI structure to ensure fiscal planning.

Visit the digital home loan EMI calculator from Bajaj Markets to project the anticipated EMI. Then enter the loan amount, rate of interest, and tenure. The tenure can be in terms of months or years. Once all details are filled in, select Calculate Now. The EMI and other repayments details will be calculated automatically.

Interest is the cost of availing loan products. However, other than interest, there are other additional charges involved with debt. Discussed below are the fees and charges associated with micro housing finance.

• Processing Fees and Related Charges: A minimum fee of up to 2.5% of the loan amount may be payable during the home loan approval process, if payment is made through a cheque. Subsequently, in case the cheque bounces, a minimum of ₹250 might be payable. In case a credit card, debit card, or demand draft is used for payment, the processing fee can be up to 2%.

• EMI Payment Delay: If you miss out on timely EMI payment, the Bank or Non-Banking Finance Company (NBFC) can levy a fine of up to 2% of the amount due.

• Document Withdrawal: If you want to retrieve documents, ₹500 can be levied for one document withdrawal, while ₹1000 can be payable for all documents.

• Advance Payments: Payments before due dates typically do not attract a penalty.

Different home loan providers have different criteria that an applicant has to meet. Discussed below are some key eligibility criteria for micro housing finance.

• An applicant must be an Indian citizen and be at least 21 years old.

• The nature and amount of income or revenue of the business should be according to the lender’s requirements.

• The credit score of the applicant should showcase their creditworthiness as per the required standards. 

• The applicant, whether salaried or self-employed, should possess the required documentation.

A micro housing finance corporation (MHFC) housing finance requires document evaluation to ensure that an applicant can repay the debt. Document examination ensures credit risk control for banks and NBFCs. Therefore, the applicants have to submit the following documents for loan disbursement.

• Identity Proof: PAN Card, Aadhaar Card, Driver’s License, Voter’s ID, etc, help verify the basic details of an applicant, like name, age, etc.

• Address proof: Along with some of the documents mentioned under identity proof, documents like rent agreements ensure the location and property check of an applicant.

• Income Proof: IT returns, salary slips, bank statements, etc., help prove income capacity.

• Property Documents: Documents that help prove prior property ownership to understand credit repayment capacity, might be required.

• Others: A cheque for the processing fee that is made in favour of MHFC might be required.

There are several micro housing finance companies. Choosing the option that gives you optimal credit terms might seem intimidating. In such a scenario, Bajaj Markets, an online financial marketplace curates a list of providers according to your credentials. Discussed below are the steps to choose an optimal micro home loan offer.

1. Visit Bajaj Markets and select the check offers section.

2. Input your details in the digital application form.

3. Specify the loan amount and preferred repayment tenure.

4. Submit the form for verification.

Discussed below are some common challenges that you may face while applying for credit terms.

1. Individuals working in the informal sector might face documentary restrictions.

2. Applicants with irregular income, might not satisfy the risk profile of the credit provider.

3. The ticket-size of this micro loan might not satisfy high-end property purchase.

4. Choosing the provider that gives favourable terms manually can be cumbersome.

Some of these challenges can be tackled through certain strategies. Therefore, discussed below are tips to make a micro home credit application seamless. 

1. A marketplace can aid in curating the list of loan providers meeting your needs.

2. EMI calculators can help specify instalment and repayment terms to avoid default.

3. Documentations should be organised before form fill-up or digital application to avoid errors.

4. Use an eligibility check calculator to avoid loan rejections.