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How Does One Get a Home Loan without a Guarantor?
Having a home of your own is a feeling that every adult has, sooner or later in their life. This emotion stems from the fact that every individual wants to be financially stable and reside in a house that they have full ownership of. While some people are able to buy a home because they have the financial means to do so. On the other hand, there are folks who might require housing finance from a bank or financial institution. People try to find home loans with low-interest rates so that they do not feel financially burdened.
What is a Home Loan?
When an individual wishes to purchase a residential property, s/he can borrow a certain amount of money from a reliable financial institution to make the purchase. The borrower has to pay off the housing loan with a premium amount known as the interest rate. This total sum of money has to be repaid by the borrower within a given period of time. Also known as a mortgage, this is a type of loan that a lot of people take when they want to purchase an apartment, bungalow, villa, and the like. Non-resident Indians or NRIs can take home loans in India by following certain rules and regulations. The repayment of a home loan is through equated monthly instalments or EMIs that include the principal amount and interest rate. A home loan disbursement process is complete only when the entire amount is paid off by the borrower.
Who is a Guarantor?
When an individual wishes to apply for a home loan, s/he should have a guarantor to vouch for them. This means that a guarantor is a person who takes up the responsibility of repaying the housing finance company, in case the borrower is unable to. Being a guarantor is a big responsibility as this individual has to pledge her/his assets as collateral against a home loan. In some cases, the borrower can be her/his own guarantor as well. It is noteworthy that a guarantor is not the same as a co-signer of a home loan. They cannot claim any right on the residential property purchased by the borrower.
5 Ways to Apply for a Home Loan without a Guarantor:
The purpose of a guarantor while applying for a home loan is to provide assurance to a housing finance company. However, it is possible to apply for mortgage loans with interest rates that are affordable without a guarantor. This is possible in some of the most reputed banks and financial institutions in India. Here are 5 ways which can help you get a home loan with the lowest interest rate even if you do not have a guarantor:
1. Have a Co-Applicant
Whether you are checking out home loans from a government bank or a private financial institution, it is recommended that you have a co-applicant while filling out the application form. This is because of the cumulative increases when two people apply for a home loan. Thus, the scope of getting mortgage loans with interest rates based on your requirements is higher.
2. Show Stable Income
When you do not have a guarantor to pledge her/his own assets, then it is only fair to provide a housing finance company with solid information about your income source. Hence, it is advised to provide documents that provide proof of multiple income sources. This will ensure that you are able to repay the home loan with its interest rate in the given time frame.
3. Keep Your Loan Amount Low
A home loan application without a guarantor can be approved if a lower sum of money is borrowed by an individual. Moreover, the interest rate will be low for a housing loan when the principal amount is not very high. Thus, it will be easier to repay the home loan through EMIs, partial payments or prepayments.
4. Look for Alternate Lenders
A lot of financial institutions offer home loans with reasonable interest rates without a guarantor. The key is to find a reputed lender in your city or town. People who are interested in home improvement loans should also check out different financial institutions that do not require guarantors.
5. Improve Your Credit Score
Increasing your creditworthiness is one of the best ways to get a home loan approved without a guarantor. Your CIBIL score plays a key role in determining whether your application will be accepted by a reputed financial institution or not. So, it is suggested to keep your credit score good by making all your payments on time and rectifying any errors in your credit history.
Muthoot Finance is one of the leading financial institutions in the country. This company aims to provide home loans with suitable interest rates to its customers. Along with this, Muthoot Finance ensures that its patrons have additional benefits such as partial payments, prepayments, balance transfers etc., without facing any hassles.
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