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HT Estates - - HTESTATES - Harsh Roongta

My CIBIL score is 610. Can I ap­ply for a home loan in any bank?

-Sachin Gaur Gen­er­ally 90% of the loans are granted for in­di­vid­u­als hav­ing score of more than 700 points. Hence, any­thing below 700 is not con­sid­ered as a good enough score for len­ders to lend and for the bor­rower to ne­go­ti­ate for bet­ter in­ter­est rates.

The score with 650 – 700 falls in the grey zone, and below 650 is not con­sid­ered good. A score below 650 could be due to rel­a­tively lower value credit his­tory or it could be be­cause of some de­fault in the past.

If your score is low be­cause of a de­fault, then it will be dif­fi­cult for you to get a home loan. If your CIBIL score is poor due to some de­fault, you can try and re­build your credit his­tory by tak­ing a se­cured credit card (se­cured against FD) or loan against tan­gi­ble move­able se­cu­rity such as FD / jew­ellery / shares / units of mu­tual funds / life in­sur­ance pol­icy with high sur­ren­der value etc where the lender can give you a loan de­spite your ad­verse credit his­tory.

By be­ing reg­u­lar in the re­pay­ments of such loan, you will grad­u­ally im­prove your credit his­tory. This is a slow process and it will take at least a cou­ple of years be­fore your credit his­tory gets re­built and re­paired enough for you to be el­i­gi­ble for reg­u­lar loan or credit cards.

I have taken a home loan of ₹ 4 lakh on a float­ing rate about 4.5 years ago. At present, the bank is charg­ing ROI of 12.12%. When I asked for a higher rate of in­ter­est, they replied that my mark-up rate was high at the time the loan was sanc­tioned. If I pay ₹ 5,000, my markup rate will re­duce and sub­se­quently my home loan ROI will also come down. Please ad­vise me on what I should do. Should I use home loan porta­bil­ity?

- Raghav Nath The cost and ben­e­fit anal­y­sis of sav­ing through EMIs and the switch­ing charges will help you in de­cid­ing whether it is worth switch­ing to the new in­ter­est rate slab.

Cur­rent (Novem­ber 2014) com­pet­i­tive rate in the mar­ket for a loan amount of

₹ 4 lakh is around 10.15% - 10.25%. You can check if your bank is will­ing to re­duce the in­ter­est rate to 10.15% (which is the low­est rate), even if it means pay­ing a small switch­ing fee of ₹ 5,000. This will help you avoid the lo­gis­tics of trans­fer of doc­u­ments from one lender to an­other. If your bank is not will­ing to re­duce the rate of in­ter­est to 10.15% - 10.25% pa, you can eval­u­ate the op­tion of switch­ing your loan to an­other lender.

Since the RBI has al­ready in­structed banks not to charge the fore­clo­sure fee in re­spect of float­ing loans, you will not have to pay any penalty for shift­ing such loans.

How­ever, you may have to pay some pro­cess­ing fee to the prospec­tive lender. But not many banks will be in­ter­ested. I have a piece of land in my name and want to con­struct a house for which I re­quire ₹ 5 to ₹ 7 lakh. Can you ad­vise on the best loan pol­icy? Should I go for a home loan or a per­sonal loan?

- Rahul Das It is ad­vis­able to opt for a con­struc­tion loan, which has a longer ten­ure and a rel­a­tively lesser in­ter­est rate as com­pared to that of a per­sonal loan. You will need to sub­mit the ap­proved plans and de­tailed cost es­ti­mates. The lender may de­cide to send his own rep­re­sen­ta­tive to ver­ify the stage of com­ple­tion .

Harsh Roongta is CEO, Apna Paisa. He can be reached at ceo@ap­na­paisa.com

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