India’s real estate sector has been reeling under pressure for the last few years, owing to factors such as liquidity squeeze for both buyers and sellers, changes in tax laws, and shadow banking crisis– to name a few. The advent of the COVID-19 pandemic has hit the sector even harder, forcing the real estate developers in big metropolitans such as Mumbai to bring down the realty prices as they try to offload their inventory. Realtors in the Mumbai Metropolitan Region (MMR) are keen to improve their cash flows during the pandemic by reducing their home inventory load, which are said to be at historically high levels.
Initiatives to Aid Developers and Homebuyers
- To ease the unsold home inventory of developers and entice home buyers, the Government of India has announced tax sops to real estate developers. The lenders too are offering home loans at an all-time low rate of interest starting at 6.75 percent.
- Taking advantage of the tax breaks, developers are coming up with several offers and discounts such as lower booking price or full refund on cancellation to attract home buyers and increase their monthly sales.
- To further boost demand from home buyers, the Maharashtra government has also lowered the stamp duty for registration of property in Maharashtra from 5 percent to 2 percent till December 2020 and to 3 percent for the period of January to March 2021. With these initiatives, the overall cost of the property has come down by around 10-15 percent.
Considerations before applying for a Home loan
The all-time lowest home loan interest rate being offered by the lenders is surely an attractive proposition for home buyers. However, buying a home is a long-term commitment, and one must consider the following before proceeding to apply for a home loan:
- Check your CIBIL score: Maintaining a healthy credit score or CIBIL score is a key ingredient to availing a home loan. A CIBIL score between 750-900 is approvable by lenders for sanctioning your home loan at lower interest rates. Thus, it is important to check your CIBIL score regularly and you may do so by checking it for free on reliable online platforms such as Finserv MARKETS. In case your CIBIL score is low, you may need to make amends to improve it before you may proceed to apply for a home loan of a large quantum.
- Check EMI affordability: While the home loan interest rate is low and your CIBIL score perfect, checking your EMI affordability by evaluating your debt-to-income ratio shall inform you of your capacity to afford a monthly EMI towards the home loan. Lenders are keen on this aspect during the loan approval process and make sure that your overall debts -inclusive of the new home loan’ EMI does not exceed more than 50-60 percent of your income. Also, you may calculate home loan EMI beforehand using a home loan EMI calculator available online on Finserv MARKETS.
- Opt for a longer loan tenure: Home loans deserve long-term commitment and choosing a longer loan tenure gives you the bandwidth to manage your other short-term and long-term commitments while planning for home loan EMIs. As your income rises, you may consider part-payment of the home loan or increase the EMI amount to close the loan early.
- Keep a check on your financial liabilities: Having too many loans or credit cards while paying a home loan EMI shall be detrimental to your financial health and could further get you stuck in a vicious debt trap. So, ensure that you have an emergency savings account parked with enough funds to repay your home loan EMIs in case of a sudden loss of income, illness or disabilities.
- Bargain with Lenders: Emerging out of COVID-19 lockdown period that witnessed poor business, lenders with the aim of healthy loan growth, are keen to push home loans to customers with healthy credit history and steady income. While you apply for a home loan with your strong credit history, you can now bargain harder with the lender for that extra half percentage point reduction in the interest rate or a processing fee waiver.
Choosing a Home Loan
Availing a home loan can help you reach your dream home destination and fulfilling this goal requires a trustworthy financial platform. On Finserv MARKETS, you can now apply for a home loan amount of upto Rs. 3.5 crore based on your eligibility. Before applying for a home loan, check your CIBIL score for free and calculate home loan EMI using a home loan EMI calculator available on Finserv MARKETS. Once you calculate home loan EMI and find it affordable, you may proceed to apply for a home loan online and enjoy a range of benefits such as flexible repayment tenure of upto 360 months, balance transfer and top-up facility at nominal interest rates and minimal documentation, tax benefits under section 80C of the Indian Income Tax Act, insurance protection for your loved ones in case of a mishap, and value-added services such as free financial health report, and a complimentary health card.
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