Need for Home & Property Loans in India

Mar 08, 2017

Have you seen how property prices have gone up in last 10 years? There is absolutely no doubt that the unprecedented rise in prices has put real estate out of reach of most Indians.

If one plans to purchase a house entirely from his own funds, it might take him decades to save up the amount. Also, there is no guarantee that the prices will rise only so much that the saved amount remains enough for purchase. This is the reason why most Indians now need to take help of home loans to purchase their dream homes.

And mind you, buying a house is the biggest financial decision for most people. Retail property loans are one of the safest bets for lenders too and this is the reason why they are comfortable giving money to genuine buyers.

But taking a home loan can be a cumbersome process if one is not aware of various factors that need to be assessed before making the application. Important criterias like interest rates, floating/fixed, prepayment options, etc. also need to be properly evaluated.

Rate of interest is the biggest factor to be considered in any loan. Lower the rates, lower will be the total interest outgo over the loan tenure. Buyers need to be beware of schemes where lenders offer floating rates with lower rates in initial years. This is then followed by higher rates in later years. It is very important to analyse the total interest outflow over the life of the loan.

Now when you consider the available loan amount, remember that higher it is, higher will be your EMIs. So make sure that you only avail a loan whose EMIs can be comfortably serviced. Downpayment that the borrower needs to bring in also needs to be considered.

Then there are secondary factors like loan processing times, complexity of documentation, processing charges, etc. that can also help buyers decide among similar available loan options.

Now even though government is aggressively implementing the real estate bill and there are chances that property prices will cool down, the need for home loans will continue as it is. Hence, make sure that you understand all nuances of home loans to get the most benefit out of it.