How Does One Get a Home Loan Without a Guarantor?
Published: Feb 22, 2023
Having a home of their own is something that every adult strives to achieve in their life. The availability of affordable home loans has made it much easier for people to be able to achieve this dream.
What is a Home Loan?
Purchasing a home is something that requires a major amount of capital, which is not something that everyone may have at the ready. That is why several NBFCs and banks offer a range of financial solutions to aid people who wish to buy their own homes. A home loan is a secured loan that can be availed to purchase a property instead of collateral. These financial solutions offer high-value funding at economical rates of interest, for long tenures, and are repaid through EMIs. The lender in such cases has the legal right to recover any outstanding loan amount (in case of default by the borrower) by the sale of the collateral property.
Who is a Guarantor?
The introduction of a guarantor helps an applicant enhance their chances of availing the best loan terms for financing their purchase of a new home. The guarantor is not a co-applicant or co-borrower who will split the burden of loan repayment with the borrower but is supposed to step in when the borrower is unable to keep up the repayments, to plug the gap in EMI payments, so the borrower does not default on the home loan.
How Can You Get a Home Lon without a Guarantor?
The need for a guarantor when applying for a home loan arises when one needs to provide assurance to the lender. However, even without a guarantor, it is possible for one to avail the best home loan in India with low interest rates from reputable home loan companies. Here are some ways in which one can apply for a home loan without a guarantor:
1.Having a Co-Applicant
Having a co-applicant when you apply for a home loan is one of the easiest ways to bypass the need for a guarantor. This is because the criteria for eligibility that one needs to meet, like income, credit score, etc., cumulatively increase when two people apply together for a loan. Therefore, your scope for getting affordable home loans with low interest rates also increases.
2.Show Stability of Income
When an applicant does not have a guarantor who would pledge their own assets as security for your home loan, then you must be able to provide the lender with detailed information about your source of income. So, you will need to provide the required documentation that shows multiple income sources and is proof that you have a stable income that makes you able to repay the borrowed amount of money and the applicable interest within the given time frame.
3.Opt for a Lower Loan Amount
It is also possible to get affordable home loans without a guarantor if you apply for a lower sum of money as a loan. If the principal amount is not very high, you may also be offered lower rates of interest for a housing loan. This helps ensure that it will be an easier task for the applicant to repay the home loan through EMIs, which makes the application more likely to be approved.
4.Look Around for Other Options
Finding the best home loan in India is a process that by default should involve a bit of research and comparison of different loan offerings. There are several financial institutions offering a range of home loan solutions with reasonable rates of interest and with no requirement for a guarantor. The key is to find a lender where you can apply for a loan without a guarantor and get the amount of money you require at affordable interest rates. This will require some research, but with the numerous NBFCs offering affordable home loans, finding a financial solution that suits your needs should not be that hard.
5.Improve Your Credit Score
Improving your creditworthiness is another great way to improve your eligibility for a home loan and getting it approved without a guarantor. Your CIBIL Score is an important factor that is taken into consideration by a lender when determining whether or not your application will be approved. So, always check your credit score before turning in your application. Luckily, if your credit score is a bit low, there are several steps you can take in order to raise it.
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