The lowering of interest rates and various government initiatives —Prime Minister Awas Yojana (PMAY) has given a great boost to demand of the houses in India.
As per September 2017 IBEF report, the value of credit to housing sector has been increased from US $ 114 billion in FY2016 to US $ 133.1 billion in FY2017.
With the prices of houses being sky-high, most home buyers need to take a loan purchase home. However, with the advent of technology, the process of applying for home loan has become very easier, quick & hassle free.
Factors Affecting Home Loan Growth
- Demonetization: Post demonetization, the banks has received lots of cash, which has induced RBI to lower interest rates. Moreover, the cash component of home loan deal has almost been eliminated with the government putting a cap of Rs 2 lakhs on cash transactions.
- RERA Implementation: The aim of RERA is to protect the home buyer’s interests. & promote transparency in the sale of real estate projects. Moreover, the sector has now received a decisive authority which helps during disputes.
- Affordable Housing: will boost home loan numbers in small city, where ticket se is low.
- Impact of GST: GST Rate of 18% Applicable for all financial services effective July 1, 2017.
Type of Home Loans
Lenders offer home loans, not only for buying a house but also for a variety of other reasons. Some of the popular types of home loans available in the financial market are described below.
- Bridged Loans
- NRI Home Loans
- Stamp Duty Loans
- Purchasing New/Old house
- Loans for Purchase of Land
- Home Improvement Loans
- Construction of a New Housec
- Balance Transfer Home Loans
- Loans for House Expansion/Extension
How to choose the right home loan
Every individual have different sets of aspiration & requirements. That’s why home loans come in so many varieties. Here the list of tips, which every borrower should kept in mind, while selecting type of loan.
- Affordability: Don’t get emotional, while taking the loan or looking at your peers house. Opt for maximum down payment. Do research for at least 2-3 months before arriving at any decision.
- Compare Charges: Analyze the home loan interest rates, processing fees and prepayment charges of all perspective home loan financiers.
- Joint Home Loan: is very good option, when you need big ticket size loan. A joint Home Loan would provide tax benefits to both the loan account holders.
- Fixed or Flexible Interest Rate: While fixed interest allows you to know exactly how much you’ll be paying. The flexible rate changes with change in market conditions. Usually, the interest rate in fixed is higher than flexible rate.
- Repay Loan Fast: If your lender bank doesn’t reduce your home loan interest rate through loan conversion option, then you can shift to another lender, who is offering lower interest rates with balance transfer of loan.
- Women borrower: Women have many benefits while purchasing a home. Get more information at: Home Loans – Benefits to Women Borrower.
- Calculating expected loan amount: You should use varieties of calculator like online EMI calculator, loan eligibility calculator to calculate your home loan eligibility amount.
- Home Loan LTV: Usually bank doesn’t offer loan amount more than 80% of property value. So, get the loan from the lender, which offer you maximum loan amount.
- Insurance: Taking insurance with home loan is not mandatory. Moreover it increases your loan amount by 5-10%. You should take insurance only, when you are not sufficiently covered by your existing insurance policies.
- Read documents carefully: Before signing any document or loan agreement, read it twice. Every single word has its legal implications.
It doesn’t matter whether you are looking to buy your first home, shift to another home, invest or renovate, you need to do thorough research to get a competitive and good deal.
We hope that this article will help when you wish to avail home loan for yourself. If you have any query related to home loans, then you can get a free consultation at CapitaWorld.