Although Life Insurance Corporation Housing Finance Limited (LICHFL) is not a bank, it is still one of the biggest lenders for home loans. LIC Home Loan is registered as LIC Housing Finance Limited and is actually a Housing Finance Corporation (HFC). The reason that LICHFL is considered good for home loans is that it has understood its customers well and it is much easier to get a loan from LICHFL, as compared to other lenders. It also has a lot of benefits when compared to banks in terms of home loans.
Although there are a number of benefits of LIC Home Loan in India when compared to other banks. Here is a list of three such benefits:
Read more: NYMag.co.uk
1. Not Rigid About Your CIBIL Score
Credit score generally ranges from 350-900 and a low score is a nightmare before applying for any loan. Most lenders require a score that is above 700, without which they rarely approve the loan application. LICHFL considers your credit report and looks at why your CIBIL score is low. If you have defaulted on any previous loans or credit cards then they also might not consider your application but if you had earlier applied for a loan and your application got rejected due to any documentation or any other issue which affected your CIBIL score, then LICHFL would consider your reason and approve your loan application.
2. Flexible about Documentation
There are comparatively less documents required for a home loan application at LICHFL. Most lenders are very strict regarding the home’s ‘Occupancy Certificate.’ Moreover, the Occupancy Certificate must be obtained exclusively from the Municipal Corporation or Magistrate’s office. LICHFL, on the other hand, issues loans based on Gram-Panchayat Occupancy Certificates, and in some situations, the loan is approved even without the Occupancy Certificate. This is really rare for a lender to do, and it is one of the main reasons why customers choose LICHFL.
3. High Loan Eligibility
When you apply for a home loan, the lender will determine your loan eligibility, or how much money you can borrow. This amount is determined by taking into consideration your salary, age, education, credit score, and other factors. When it comes to loan eligibility, LICHFL frequently favours the applicant, approving a larger credit sum than most lenders. LICHFL is a good fit for first-time home loan customers in general. However, you should thoroughly check everything and proceed with caution. While LICHFL can be beneficial to the borrower, it does come with a cost.
Short-Term Gain with Long Term Loss
Many people looking for home loans are attracted to LICHFL because it offers a bigger loan amount and is less demanding with its application standards. However, once the loan is approved and repayment begins, these individuals frequently discover that the service quality has degraded significantly. They are required to visit the bank to perform minor procedures, are charged hidden costs, and are not provided with timely loan information. The Interest Rate is the mother of all problems. LIC Home Loan Interest Rate can reach astronomical heights when the home loan enters the floating-rate period. For example, the rate is currently at 11.5%, but it has the potential to rise to 12.5%.
When your loan enters the floating-rate period and the interest rate is increased, LICHFL increases your EMI. The increased EMI completely throws your finances off-track and it might even make you struggle to make ends meet each month. The only option left with you to get relief would be to switch your home loan from LICHFL. Staying with LICHFL in this situation would make it difficult to manage your finances.
LICHFL not only has some advantages that sets it apart from other lenders but also has some disadvantages. There are many people who face issues with documents, credit score and eligibility when they are first taking a home loan and LICHFL is a big help for them in that situation. There are many lenders in the market who charge much lower rates of interest and allow you to regain control over your expenses. If you are applying for a loan and find that LICHFL is the best suitable option, then you should apply for the loan. But it is recommended that you plan the first two fixed-rate years of your home loan in such a way that you can improve your credit score and get all the necessary documentation.