Opportunities don’t come knocking on our door very often, so when they do, one must use it to the fullest. The aftermath of the Covid-19 pandemic has made one thing clear that it is way better to own an apartment than to live in rented accommodation. People finally realise that investing in real estates is a reliable option as it offers steady returns compared to a highly volatile stock market which has high risks.
Here are the top 10 tips to keep in mind while taking a home loan:
- Proper Research: Don’t blindly follow whatever your loan agent says. Do your analysis on the most practical terms within the market.
- Spend Conservatively: Spend thoughtfully throughout the home loan tenure. Saving can assist you in foreclosing the loan.
- Increase the bridge funding: Since each borrower needs to pay cash from one’s own pocket, try and pay an additional deposit. This may cut back your interest paid on the principal.
- Read the documents: Browse the documents carefully before you sign it. Raise questions on the terms and conditions if needed.
- Compare processing fee: Whether or not it’s for a new loan or a balance transfer, enquire all the banks before you finalise.
- Park your additional funds: Varied banks let borrowers park their further funds within the loan accounts.
- CIBIL Score: To induce an affordable rate of interest on your loan, you want to have a CIBIL score of 750. A low CIBIL score will most likely reject your application.
- Understand foreclosure norms: Recently, the RBI has placed a ban on foreclosure penalties, so borrowers don’t pay extra.
- Choosing between floating or fixed rates: It is essential to understand that floating rates work out cheaper than fixed rates in the long run.
- Save up to foreclose: The sooner you free the home loan EMI the better.
Help from the RBI:
25 years back, home loan rates were over 10%. With the RBI slashing the repo rate by 40 basis points (100bps=1 percent), now the repo rate is at an all-time low of 4%.
Ever since the lockdown began, The RBI has reduced the repo rate by 115 bps which is excellent news for home loan borrowers who want to purchase their dream house. Home loan EMI has gone down to almost 7.5%, and it may go down further. If you want to check your home loan EMI you can use the PNB housing home loan EMI Calculator.
One can now earn rental income, which is currently at 2.5% of capital value in metro cities like Mumbai. With home loans at around 7.5%, the net effect, if a home is purchased for letting outcomes to 5%. This is another win-win situation, which ensures that you are ahead of inflation because of the neat combination.
With the cheaper rates and the availability of 80%-90% loan amount sanction, this is the right time to avail a home loan to buy the house that you always wanted.
Looking at the current market scenario, it is predominantly a buyer’s market to make the investment and fulfil the dream of owning that dream house.