Home Loans for Those With Bad Credit: Knowing the Reality From Fantasy

The myths surrounding home loans and mortgages make it seem that such loans are impossible to those with bad credit histories. But the existence of home loans for those with bad credit highlights the fact that this is not true.

Because of the size of a home loan, there is considerable importance placed on getting accurate information before committing to a home loan. After all, when a home worth $200,000 has been purchased, the debt can last for more than 30 years, making it a debt for life – almost.

The truth is that while bad credit ratings do have an influence on the rate of interest charged and even the size of the mortgage made available, rejection of an application is down to other issues. So, while there remains no such thing as guaranteed loan approval despite bad credit, there is at least an opportunity to improve the chances of getting approval when the realities are known.


The manner in which bad credit scores are calculated is quite complicated, but the principal is not. In its simplest terms, bad credit occurs because of poor money management, bad financial luck or unexpected and quite sudden financial pressures causing defaults, late payments and even bankruptcy. So, those eyeing home loans for those with poor credit can have widely varying stories.

The lowest score that a person can have is 300, with the highest 800, and it is between these values that the actual score resides. People with high or excellent credit ratings figure between 700 and 800, while those with very low credit ratings rank between 300 and 600. Those with scores between 600 and 700 may qualify for a home loan, but it depends on the lender.

Of course, the scores can also be improved. Every time a loan is repaid in full, regardless of its size, the credit score is adjusted favorably. It may never be enough to make guaranteed loan approval despite bad credit a reality, but the benefits relate to lower interest rates.

The Significance of Income

It hardly comes as a surprise that the monthly income of an applicant is a hugely influential aspect of any application for home loans for those with bad credit. It is far more influential than a credit score because it confirms whether or not repayments are possible. The credit score suggests the likelihood of whether the repayments will be made at all.

So, even if an applicant has a terrible credit score, if his income is big enough – most especially the excess income – then home loan approval is possible. In contrast, if an applicant with an excellent credit rating has too small a monthly income, then he will be rejected.

For self-employed applicants, the issue of income is not simply a case of showing a pay slip. The profitability of the business of the applicant needs to be examined. If the business is not profitable, then logically the applicant as no income, so the chances of a guaranteed loan approval despite bad credit is practically zero.

Improving Your Score

Improving your credit score can make a big difference in securing home loans for those with bad credit. The most effective way to do so is to take out a series of small loans, like payday loans, and repay them in full. With each debt cleared, the credit score increases and the terms of a home loan improves.

This may take some time to have the desired effect, of course, but after 6 or 8 months, a guaranteed loan approval despite bad credit will be closer than ever. And in that time, the search for the right lender should be ongoing, with the online lenders typically offering the best deals.

NRI Home Loans Versus Standard Home Loans in India

The Foreign Exchange Management Act (FEMA), 1999, defines NRIs as individuals residing outside the country due to employment, business or some other purpose in a situation which calls for them to remain outside India for an uncertain time period. Any person sufficing this definition may apply for a home loan in India. Even though an NRI can avail oneself of a home loan with a similar simplicity and convenience as a normal resident, there are several elements distinguishing NRI home loans from standard loans in India.

Greater Rate of Interest:

In contrast to the interest rates that Indian residents need to pay for home loan, NRIs are usually required to pay a 0.25 to 0.5 percent costlier interest.

Shorter Tenure:

Home loans are availed to NRIs for relatively a much smaller maximum tenure of between 5 to 15 years, while standard loans by several banks can last as long as 30 years. The reason behind this limited tenure lies in two commonly noted facts: a greater capability of NRIs to repay the lent amount and their general will to borrow loans of comparatively shorter tenures.

Percentage of Cost Covered:

Unlike standard home loans, the amount, available through NRI loans, provides for at most 80-85 percent of the total worth of the concerned property. And this amount credited by banks is subject to the borrower’s gross monthly income (GMI).

Method of Repayment:

NRIs are only allowed to pay their loan EMIs in the form of direct remittances through the normal banking routes, comprising their Non-Resident Ordinary (NRO) and Non-Resident External (NRE) accounts in India. Furthermore, to ensure security, most banks insist on keeping the first mortgage associated with the property in their own name.

No Tax Benefits:

NRIs, having no source of income inside India, do not have the facility to claim tax rebates on Indian home loans, since they are required to pay tax in the country identified with their occupation and income.

To sum up, NRI loans are quite distinct from standard loans in India, on account of a number of security and payment capacity factors. If you are an Indian, then you will be taking advantages of different plans and schemes. In case, you are a non-resident Indian, then you will be having fully different plans and schemes. Therefore, in the light of the above, if you are aspiring for taking loans, it is necessary for you to gather all the required knowledge and information about each and every aspect of loans to be sanctioned to the Indian residents and the non-resident Indians. A wise step will enable you to serve your purpose with complete peace of mind.

Golden Tips to Find a Online Home Loan

Are you looking to get a home loan? The internet is a great way to find a loan, and online home loans are fantastic. If you need some tips to find the best, this article is for you! There are many options when it comes to finance, and luckily the internet is one of the best ways to make this happen. The first thing to remember, is that you have many options.

This options is choice, and choice allows you to save. The main aspect of finance, is the level of interest. And this determines how much you need to pay back.Take for example a loan that is for $5,000. You get this money, and this is great, but the lender needs to make money. So, they charge interest on top. Finding a better level, the lowest, you will save.

But, we can’t stop there, because there are some other considerations. For example, there is the need to consider the hidden charges, when it comes to financing. The hidden charges on a loan can make it end up not being the best. The research will allow you to uncover this information.

With so many lenders online, doing this research, and finding this information, is the first route to success. The first thing you will need to do on these web sites, when applying, is to make sure that you have your information with you. Having both personal and financial information, will allow you to actually be able to apply online and get your loan fast!