In the current age of technology, digitization has entered almost every aspect of contemporary life, bringing a revolution to businesses and has made it an important plan of action for success in this competitive world. With the pandemic faced around the globe, the importance and awareness of digitization have increased. Then why should home loans be left untouched for digitization? A major challenge that house loan faces is not being able to fulfill the requirement of availing best housing loan, by many sections of society, especially for those of tier II and tier III cities. Digitizing the home loan process has been a big boon in overcoming this challenge.
The lockdown in the near past has played a big role in compelling the banks and the policymakers to make the loan lending process simpler. Home loans have become one of the major gainers with this policy, as it has very complicated paperwork involved. Eventually, the entire process of home loans has improved at every step with the inclusion of procedures like virtual application, video KYC, securely looking for the details of bank and tax online, and also the direct incorporation with the bank system is done. A maximum of the best home loan lenders have incorporated simpler lending procedures in their systems.
Difficulties faced in the offline process:
Availing of a house loan via offline process is a time-consuming process with much paperwork involved; it also involves several stages of documentation and approvals along with physical visits to the concerned financial institution. In the home loan process through offline mode, the entire procedure like iterative documentation, and stamping, is done manually. Hence, even with the best home loan lenders, the risk of documents getting misplaced persists, which ultimately leads to extra time in the process as the banks may contact you for additional requirements.
Once these hurdles are crossed, there are chances that the process of sanctioning and approval of the loan might take a long time. In the traditional method lot of paperwork is involved, so being updated with the real-time status of the application is also very difficult. Also, consumers usually believe that they will have to just pay the interest of the loan and the processing fee while buying a home loan. But then later, many hidden charges are revealed.
Advantages of the digital home loan process:
Digitization of the best home loan offers process is an effort toward overcoming offline difficulties. Thus, the advantages of the digital home loan are as follows:
1) Easy Comparison:
In the digital process, the applicants get a bigger picture of the home loan offers provided by various banks and NBFCs, as the digital process gives access to the loan quotations and loan offers provided by multiple financial institutions on a single platform. Whereas, the same is not the case with the traditional method. The traditional method is a slow and tedious process, so applicants hardly get access to the varied offers and benefits provided by multiple financial institutions. Thus, the digital process helps the applicants in easy comparison among the banks and NBfcs and select the best home loan finance company.
Acquiring the borrower’s data online is quick and easy, physical involvement is almost avoided, transparency is maintained along with the real-time status of the application, and human errors with data entry are avoided. All these benefits make a home loan an instantaneous and hassle-free process, unlike the traditional method, where the entire journey is time-consuming.
3) Improves the underwriting process:
With the help of cloud integration, the system syncs the data from various bodies like credit scoring data, credit bureaus, valuations, etc., unlike the offline method where the bank needs to build relationships with multiple bodies in order to avail the data. Also, in the digital process, AI-based algorithms and machine learning procedures are more successful than human judgments.
4) Helping borrowers without any credit history to avail of home loans:
In the offline method, the financial institutions look for the credit score of applicants, and in case of insufficient credit score and insufficient mortgage, the applicants’ home loan application is rejected.
But by applying for a home loan online, this problem gets solved to a greater extent. As in the digital home loan process, alternative credit score data is used by the fintech companies, and this benefits the first-time applicants to avail the home loan in a simpler manner.
5) Increasing financial inclusion:
Consumers can apply for a home loan online using various digital platforms like the lender’s website, consumer portal, and social media page of the lender, and by texting the applications. This results in more applicants applying for the purchase of home loans. This also helps the lender to reach the maximum number of consumers and help them purchase the house of their dream through a secure channel in a simpler manner. There are still remote places where branches of financial institutions have not penetrated well; in such cases, it becomes very difficult for consumers to fulfill their dream of owning their your house. This is where the digital process helps them.
All these benefits encourage the borrower to do the home loan research and select the best home loan lender parallelly with the search for their dream house. Due to this, they get into home loans online earlier in their journey of purchasing a new house, and they can even utilize the time span, which is usually 3-6 months, in searching for a suitable home loan lender. This improves the efficiency of the home loan procedure.
Everyone dreams of owning a house rather than paying the rent from their hard-earned money. So the process of availing a house loan should be a hassle-free process, and as we just saw that the digital process is a way forward in the journey of purchasing a house with the best housing loan in a more convenient way. It works like finding solutions to all home loan problems under one roof, as it helps you to search for the best home loan lenders and best offers and apply remotely without any need for physical contact.