PUPUTUPU: Home Loans up to Rs5 lakh without documents

Home Loans up to Rs5 lakh without documents

Your family driver once told you that he wanted to buy his own house because he was spending too much in rent.
The problem: Even though he had managed to save a decent sum over the years, it was not enough to fund the entire cost of the house. The bigger prob- lem: No bank was ready to give him a home loan because he didn't have the required docu- ments, such as salary slips.

Now, you can show a way out to him. Mumbai-based pri- vate firm Micro Housing Fi- nance Corp. (MHFC), with a net worth of Rs15 crore, has come up with a solution for the unorganized sector. It is offering home loans up to Rs5 lakh to the unorganized sector without asking for the standard documents.
Target group Though there has always been a huge demand for af- fordable housing, the absence of credit makes it difficult for the unorganized sector to real- ize their dreams.

The company is targeting people such as taxi drivers, street-side vendors, house helps etc, who have recurring income but have no proper documents to satisfy lenders.
No documents Says Madhusudhan Menon, CEO, MHFC: "Standard docu- ments like salary slips and income-tax returns are not the only way to judge the credit- worthiness of a prospective borrower. Salary slips will only show how much a person earns, but there are other ways to check the earning and repay- ment capacity of a borrower."

The company has even set up its own independent agen- cy to conduct surveys and veri- fication checks on prospective customers.

Says Menon: "We conduct personal interviews with cus- tomers and carry out surveys to know about the earning ca- pacity of people from a partic- ular segment. So, if we are lending to a taxi driver, we will look for his driving permit and the number of years he has been driving." What's the security Though MHFC does not ask for any standard documents, it is mandatory to keep the prop- erty papers with it, just like any other home loan. After the loan gets sanctioned, MHFC mortgages the property being financed as security.
Loan amount and costs MHFC finances up to 80% of the value of the property.

The loan, however, is a little expensive. MHFC charges a floating interest rate of around 12-14%. The rate may vary ac- cording to the amount of the initial payment and the term.

The company also charges 1% processing fee before dis- bursing the loan. It, usually, takes around two weeks to sanction the loan. Who gets it?

"We do not lend everyone who comes to us. We have tied up with various developers who are in the business of con- structing affordable houses," says Menon.

The company claims that, till now, they haven't faced with any delinquencies on loan repayments because of their unique business model.

"About 250 people have ap- plied so far, and we have sanc- tioned about 200 loans worth around Rs7.5 crore," says Nachiket Shelgikar, director, MHFC.

So far, MHFC has tied up with around 20 developers across the country with a focus primarily on Maharashtra and Gujarat. In Mumbai, they have tied up with Neptune Develop- ers for their "Swarajya Proj- ect", Poddar Housing for their "Samruddhi Project" and Tata Housing for "Shubh Griha Project". The company is also in talks with a couple of devel- opers in West Bengal and Andhra Pradesh.