Home is where the loan is

The real estate industry today has seen a huge change as far as the attitude of the buyer is concerned. Today's buyers are more informed and aware and carefully retain other's experiences in their mind so as to extract a lesson from it later. But, even so, the irony is that too many smart people are buying homes and still having problems. Sometimes, it's the quantum of readable material available that is confusing in itself. Want an upper hand when applying for a home loan? Believe it or not, just revisit your basics. 

1. Impact of loan on your personal finance: With the new cash out flows there's bound to be a dent, so you'll need a brand new monthly budget in place. 

2. Know your maximum loan eligibility: Some banks calculate the income available for EMI payments based on an individual’s gross income and not on his disposable income. Do your research here. 

3. Check your CIBIL score: A score above 700 gets home loans easily. The Credit Information Bureau India Ltd (CIBIL) provides a credit score on a scale of 300 to 900 based on your current financial stability, loans existing, card usage, etc. 

4. Co-application: If you want a loan amount higher than what's offered, having a co-applicant with his/her own source of income helps and also make sense from a taxation perspective with each applicant being able to avail the tax benefit available on interest payment of an EMI. 

5. Tenure: Shorter tenures mean greater EMI burden, but your loan is repaid faster. What you would pay as interest over the term of your loan would be substantially lower. 

6. Type of interest rate: The type of interest rate you choose has an impact on the monthly EMIs you pay. It is important that you know the difference between fixed rate home loan and floating rate home loan. 

7. Pre-payment and foreclosure charges: Sometimes, pre-payment of loans may require you to pay a penalty. Do your research well so that there's flexibility if you can close your loan earlier. 

8. Loan Options: Banks generally offer either of the following loan options: Floating Rate Home Loans and Fixed Rate Home Loans. The EMI of a floating rate loan changes with changes in market interest rates. 

9. Take cover: A life insurance plan that covers the re-payment of loan in the event of an unfortunate death of the borrower can at least help the family retain their home. 

10. Loan transfers: Old customers have higher rates of interest while the new ones have lower rates. So, over time the good deal turns into a sour deal. So the cost of switching is always high. 

11. Implications of delayed payments: Try to clear your EMIs in time because once you are declared a defaulter or your credit history turns bad, and taking any kind of loan in the future may be an issue. 

12. Read the documents carefully before you sign: Check the documents to ensure that the terms are same as what you negotiated and agreed upon. Don’t let the bunch of home loan documents bog you down and just sign on the dotted lines. 

Buying a home is an important personal finance decision for every individual. Before applying for a home loan and paying your processing fee, make sure you analyze the above aspects to get a satisfying and smooth deal

A steady boost in housing demands - All appreciation to the latest RBI rate cut for home loans

How many of us were happy when the Reserve Bank of India (RBI) announced the rate cut on home loans? Although the rate cut was minimal, it brought about a new ray of hope to the troubled economy of our country. The real estate sector was given an opportunity to sigh a sense of relief and the common man was given a chance to reconsider the thought of buying a house. It is expected that a lot of leading banks will follow suit and cut down the interest rates for home loans.

Are you aspiring to own a house? If yes, then this is the right time to go ahead and purchase one. It is good news to people that many property consultants have seen the RBIs decision to cut key policy rates as a positive sign to encounter high demands in the real estate sector. The real estate space is on the verge of gaining back its comfort and stability in the industry. Sending out positive ideas and signals to investors worldwide, the rate cut is a policy measure that is going to play a crucial and pivotal role in the betterment of a lot of economical aspects.

Changes that can be predicted in the real estate sector

It is of course great news for each and every individual property buyer in India. The rate cuts provided for home loans by RBI is welcomed by most of the individuals in the real estate sector as well. With the relaxation of such key policy rates which has taken place after a long time span, there are certain changes and developments that can take place in the near future. Some of them are:

* The slowing Indian economy can expect to revive and see a bright future. The annual growth rate can also be expected to see slight stability.

* Home buyers have greater possibilities to get motivated and do their home purchase in the near future.

* Real estate developers and builders can hope to create a balance that was previously hindered by inflation seen in almost all industries.

* Other banks may be encouraged to reduce their own base rates which in turn can benefit a lot of home buyers and developers.

* Reduction of interest rates can automatically instill confidence to those in the real estate sector to perform better and help in the growth of the economy.

* Increase in investments proves to enhance and gradually improve the liquidity in many banking sectors in India.

* Home loan availability will become adequate in the market which can attract a lot of investors.

* A guaranteed boost for the sentiments of home buyers and creating opportunities for more real estate sector activities.

* Apart from being the sole reason for providing relief to individual home buyers, this move can help in the task of stopping the dramatic aspect of price escalation.

The last three to four quarters have seen a considerable lag with respect to home sales. The 25 basis points cut in the Repo rate by the RBI can alter this situation. Though the reduction of interest rates on home loans can differ from one bank to another, home buyers can look forward to see a positive reduction. Lots of excitement and cheer engulfs the lives of those who have dreamt to buy a home at affordable interest rates.