I have done my homology model with a template of 33% sequence identity. That was the closest hit available by blast search.I used Swiss Model to perform the same.The RMSD value was 0.7A of the model. But the Ramachandran plot is showing only 87% with 4 outliers. Can that model be further used for my studies? Or is there any other evaluation process that be performed?
Your result isn't bad considering you had only 33% alignment (the most important determinant of the model).
Next steps: Are you sure the best you can find is 33%? Have you considered relaxing the BLAST parameters? Homology modeling is a model-->refine>>model>>refine process. Is your template from NMR or X-ray? - Is the template high quality? (post the link to the PDB entry here please) What do the ERRAT and Verify3D results look like? - what are the problem regions? Have you visualised the model mapped on to the template? Where do they differ?
How about using ROBETTA http://robetta.bakerlab.org/ or I-TASSER http://zhanglab.ccmb.med.umich.edu/I-TASSER/ ? Or using HMM-HMM alignment for sequence alignment. It is more accurate than the alignment by BLAST.