Affordable loans lead to affordable homes…
The need of the hour is to enable lower and middle income Indian families to acquire low-cost houses by providing them access to long term hassle-free housing finance. This will lead to development of affordable housing for low-income households, millions of whom need security in the form of need a roof over their heads.
One of the hindrances is that most of the lower income persons are dependent on the informal sector for their livelihood. They tend to be self-employed in rural or semi-urban areas and would be shopkeepers, shop employees, small traders, petty vendors, plumbers, carpenters, electricians, drivers, maids and the like. There are also salaried low-income employees like Class-3 & 4 municipal employees, teachers, private sector workmen etc.
Since their earnings are in cash or received irregularly, they are unable to provide proof of income in the form of documentary proof which is demanded by large housing finance companies.
What is the ‘modus operandi’ of affordable housing finance companies?
In the absence of documentation, affordable housing finance companies take a more holistic view. The approach is to actively interact with the person to understand his or her vocation, average income, expenses, savings ability, number of dependents etc. Concurrently, field investigations carried out by the lender.
At the end of this process, which does not take long, the lender and borrower arrive at a mutually acceptable EMI figure which the borrower would be able to pay every month without any problem. Housing loan amount is determined by this EMI figure. After the property proposed to be bought is identified by the borrower, lender’s experts ensure that the property has a clear legal status.