Three years ago a close friend of mine applied for a personal loan. While we were talking, he completed the application process. What amazed me was the speed at which his loan was approved and paid off. It all happened in literally minutes. It’s true that he had a long-standing account with the bank and solid credit, but it was still instant.

Cut a month ago, the same friend applied for a home loan. From experience I expected it to be a breeze. He had down payments, necessary documents, more than required income, and his needs were within the limits of the payout.

Imagine his surprise when the process took days instead of minutes and was filled with multiple visits to the branch and multiple emails about documents. I found this ironic because he could get an unsecured loan in minutes, but it took him longer to convince the bankers that he qualified for a secured loan.

A loan where a bank can easily dispose of the property if the person defaults tomorrow, a loan to which an insurance top-up is added to cover in case the person dies due to an unfortunate event. However, this type of loan requires innumerable follow-up and withdrawal processes than a personal loan that has no collateral and no insurance top-up, but which can be withdrawn from a bank in minutes.

This incident got me thinking. What was the principle behind this undue delay in a loan backed by adequate collateral? Given the technological advancement we seem to have made over the past few years, the process of documentation, site visits, and withdrawals should be pretty quick.

Part of the problem is in the process. The required comprehensive documentation, the physical valuation of the property and the lengthy sanction and disbursement process could use a revision. Each step of this process can take up to days or weeks, depending on your requirements.

The recent Union budget has proposed several measures that will be conducive to homeowners looking to buy their dream home in 2021. There is optimism in the industry that retail sales will be encouraged and new affordable housing projects may be launched with the government’s vision of “Housing for All”.

At such a time, mortgage lenders need to be agile to make the most of this opportunity and facilitate lending by ramping up their digital platforms to simplify the borrowing process.

With considerable data already available with the India stack and in the records of banks and credit bureaus, home loan lenders should focus on a process of assimilating the available data and mapping it to the borrower’s financial records.

For documents intended solely for home loan use, lenders can consider a special quick toolkit with additional documents that can be uploaded digitally. Lenders can also use geotagging and video apps to check the physical condition of the property. This could reduce processing costs and time.

The Indian residential real estate sector has not seen a downturn despite the difficult 18 months the economy has been watching. That change could very well be the boost the mortgage loan books need. However, this would mean significant changes in traditional business models, but it would also be extremely necessary in the long term.

The recent pandemic has paved the way for accelerated digitization and lenders who invest in a smooth and fast flow of the entire credit cycle will win significantly.

As a consumer, I would simply say that despite the high interest rates on personal loans, I prefer their speed. If home lenders increased their interest rates slightly to allow for quicker and easier loan processing from the comfort of my home or office, I certainly wouldn’t mind the compensation.

The extra cost can just be worth it to be hassle free and get my money drained faster and own my dream home with a much bigger experience!

For a country aiming to become a developed nation, I believe that a hassle-free instant loan for our citizens will bring more fundamental social benefits to our citizens than simply paying off a personal loan at high interest rates and without proper verification at the end. and has the potential to plunge our compatriots into a debt trap.

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