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 email@example.com