Sachin Bansal’s Navi offers home loans at 6.4%: Here’s what borrowers must do

The home loan interest rates starts from 6.46 percent per annum. This interest rate is offered to eligible customers who have stable cash flow, a combination of good credit score and loan repayment track record. The customers can complete almost the entire application process over the NAVI app without needing to visit the branch. The company does not charge any processing fees nor levy any additional administrative fee, Central Registry filing charges (Securitisation Asset Reconstruction and Security Interest or CERSAI), search report charges, and so on.

Navi Technologies is a new-age fintech company, started by former Flipkart co-founder Sachin Bansal and his college friend Ankit Agarwal, in 2018.

Applying for the home loan via the app

In order to apply for a home loan using the Navi app, you must create an account through the app. For this, you need to provide your name as mentioned in your PAN card, personal details (date of birth, email id, mobile number, marital status, etc.), employment details, monthly income, upload your PAN card copy, etc. While availing a home loan, details of property and title documents will be required. With the supporting documents, you also have to provide a permit to gain access to your financial SMSes, contacts, location data, installed applications (on your mobile phone), storage and such other device data to evaluate your profile.

If you revoke any of the permissions on the app, you cannot complete the home loan application process using the app. You and your co-applicant also need to provide access to credit reports. Once your Navi account is active based on the information provided, your home loan eligibility is informed. You can then decide the home loan amount you wish to apply from the eligibility and your ability to pay monthly instalments.

The lender requires you to issue auto-debit instructions from your bank account to repay the loan amount, prior to disbursal. It cannot be changed or canceled during the term of the loan. The Navi app will display the details of the EMI, including the due date and amount payable, as well as whether or not your payment was received, regularly.

What works

The lender has linked the home loan interest rates to an external benchmark i.e. Treasury Bill Benchmark linked Lending Rate (TBLR).  The customers also have the option to choose a fixed rate in place of a variable rate for three years. “The lender decides the home loan eligibility of any customer based on their credit scorecard, which is favorable,” says Atul Monga, Co-founder and CEO of BASIC Home Loan. He adds, the lender also calculates the interest rates based on the customer profile and internal pricing framework of the company.

The company is reaching to customers directly and passes on the cost saved on intermediation to them as attractive interest rates. There are no charge while applying for the loan and post-loan disbursal. There are no prepayment charges, the customer can prepay the loan through the app.

“However, before choosing the lender, you should always compare the home loan offers in the market not only at affordable rates but also evaluate services and charges,” says Raj Khosla, founder and MD of MyMoneyMantra.com. You must compare the offers on home loan aggregator website, then opt for the best scheme.

“Navi Finserv is RBI registered NBFC thus any offering coming from them is under the purview of the regulator and also NBFC ombudsman,” says Khosla. So, it seems safe to apply for a home loan through a Navi app.

Also read | RBI’s warning to coercive digital lending apps: What borrowers must be aware of

What doesn’t

Now, Navi mainly focuses on non-affordable customers and mostly serves salaried customers. “They should also have strong offerings and similar home loan schemes for self-employed individuals,” says Monga.

The external benchmark Navi uses is the three-month TBLR rate. That is a much volatile rate and would result in home loan rates moving every quarter confusing the borrowers.

“NAVI’s home loan scheme is a new product in the market. So, it will be a good a customer practice if the lender could share product details, including property valuation method and loan eligibility criteria in more detail on their website,” says Khosla. At present, not much is known of these aspects on its own website.

According to the terms, lender do not permit the borrowers to remove the Navi app from the mobile device until you repay the loan. In case you are compelled to remove the app from your mobile device, then you have an option of sending a mail to Navi. Any violation of this term will be tantamount to fraud, and the lender may initiate legal proceedings against you.

Should you apply?

The home loans are for long tenures, i.e. 15-20 years. During a long tenure, there are several difficulties in the financial journey of the borrower. “You may need to re-negotiate and re-structure the home loan instalments. Before applying for a home loan, you need to access whether such facility is available from a digital home loan lender like Navi,” says Khosla. The fintech lenders need to have the flexibility to re-model and re-negotiate like traditional banks.

Navi did not respond to a Moneycontrol query on re-structuring terms in the home loan scheme.

Digital lenders offer convenience, but because the relationship is typically entirely digital, they rely on a lot of access to your personal data stored on your mobile phone. “Understand how the personal data and home loan documents are being preserved by the fintech lender,” says Monga. In December, Navi had spam users with personal loan offers containing PAN data and faced social media backlash. It’s also important for customers to know the management background and how well the digital lender is funded before applying for a home loan.

If you must go with a digital lender, keep the tenure short and the loan amount as low as possible. If you wish to stay conservative, banks and housing finance companies offer you competitive rates as well.