Property prices have significantly dropped, and home loan rates are currently at an all-time low. If you have been contemplating investing in a new home and availing of a housing loan, there is no better time than now. Recent studies reveal that residential real estate started to revive from the third quarter of 2020 after the economy began to open. During the first quarter of 2021, total units sold in the top eight Indian cities had risen by almost 44%. This meant a total of 71,000 extra units were sold in the first quarter of 2021 than the figure registered in 2020. So, now is the perfect time to avail a housing loan in India. Here are some of the major reasons why:
#1 Home prices in many cases have eased and in many cases, the cost has not gone up as much as before. Per data provided by the Reserve Bank of India’s (RBI’s) home price index, prices of homes, on average, came down by 1% in the third quarter of 2020 compared to the previous year; growth in the subsequent quarter was only about 1.2%.
#2 Homebuyers are likely to benefit from a significant drop in interest rates as RBI cut its repo rate — the key policy rate — by 115 basis points (bps) from 2020 to support the economy. This is in addition to about 135 bps worth of rate cuts that had already happened in 2019.
#3 The incentives offered to homebuyers are also on the rise. Some lenders have started offering lucrative schemes and discounts. Some lenders are even providing No home loan EMI until possessions.
#4 Home loan rates are at an all-time low now. It is a good idea to avail of home loans when the interest rates drop. The interest rates on home loans have dipped to their lowest in about four decades. The rates are as low as about 6.65%, offered by some leading financial institutions.
The lowest home loan interest rates mean the lowest home loan EMIs for borrowers. Further, this, over the entire tenor of the loan will lead to large savings on interest payments. For instance, at about 6.65%, the home loan EMI for a loan of Rs.50 lakh for a 15-year term is nearly Rs.43,970. That means almost Rs.6,744 less compared to what a financial borrower would pay if interest rates were 9% — as the case was in 2019. This indicates more than Rs.12 lakh of savings over the loan tenor, if home loan interest rates stay unchanged.
#5 In the current scenario, there is a host of services — both nonfinancial and financial — that leading lenders offer to aspiring homebuyers. Bajaj Housing Limited, for instance, offers a host of advantages to making the home loan application process easier, more efficient, and more seamless, including feasible processing fees, quick doorstep services, and home loan insurances.
While the prospect of purchasing a new house always seems exciting, the mandatory steps towards fulfilling the goal must be prudently planned. Some basic tips borrowers must follow as they avail a housing loan to buy their dream property are as follows:
- Keep Track of Your CIBIL Score: To ensure you get a lower interest rate on your home loan, you must maintain a healthy CIBIL score. Before you avail of a housing loan in India, keep tracking your credit score and try improving it months before buying a house.
- Understand EMIs: A housing loan in India is a long-term commitment. Your repayment tenor can go up to 360 months. To service a home loan for a prolonged period, it is imperative to have a full-proof repayment plan
- Compare Lending Rates: Once you have clarity regarding the down payment you can make and the loan EMI you are comfortable with, it is time to compare rates from different lending bodies. Check the interest rates and associated fees.
- Check Prepayment Charges: In case the repayment plan you have chalked out includes home loan foreclosure, check whether your lender will charge a penalty on that before you avail of a housing loan.
The Final Word
Overall, the residential real estate market is expected to remain buoyant in 2021 owing to renewed interest among aspiring home buyers. This is particularly because economic growth is expected to revive after a contraction last year. COVID-19 waves, however, continue to be the biggest risk for the sector, especially if new variants add to the severity of the spread, leading to an increasing number of localized lockdowns as was witnessed during the second wave in both April and May.
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However, if you have always dreamed of buying your own home and never could afford to do so, avail of a housing loan and fulfil your dream now. You can use any home loan calculator to check the available interest rate for a chosen tenor and your home loan eligibility. To know more, you can connect with our experts today.
