After the corona virus epidemic, people have started feeling the need of home. So the question arises, should you buy a house? The biggest question is whether you should buy a home by taking a home loan or not? What are the things to be kept in mind while taking a home loan? Today we will discuss about this also.
Home loans and residential properties will continue to be in demand in the coming 10 to 20 years in India. Because during this time the population of India is not going to decrease.
A large number of people are also migrating from villages to cities. As a result, the demand for urban residential property will remain high in the years to come. In such a situation, the question arises whether you should buy your own house during this time? Or should you live in a rented house?
If you buy your own house, should you buy a home by taking a home loan? Today we will answer these questions. Also will tell under which condition you should take a home loan?
Should you buy a house?
The big question is, should you buy a house? You should see this thing according to your need. Buying a home in India has more of an emotional aspect. We get a different satisfaction after buying a house. It is commonly seen in India.
What should you consider your needs before buying a home? The work-from-home culture has now stabilized in the aftermath of the coronavirus pandemic. Many companies are now getting their employees to work from home. Even though things are slowly getting back to normal. In such a situation, the space space in the house is decreasing.
In such a situation, if you are thinking that you should buy a new house, then understand your demand criteria completely. After that decide about taking a home loan.
Due to work from home, now people need a separate room in the house. When there are two or more people working-from-home in the same household, this problem is exacerbated.
In the aftermath of the coronavirus pandemic, people across the world are eager to buy their own homes. Similar case has also been seen in India. For this reason, the residential property market has seen the biggest boom since the coronavirus pandemic.
Is this the right time to take a home loan?
Now the question arises here that is this the right time to take a home loan? So the simple answer is that at present inflation is increasing all over the world. However, the Government of India has taken some steps to reduce inflation. And its effect is also being seen in the market. Essential items related to home construction, which includes iron bars, steel, cement and other components. Their prices have come down.
However, the Reserve Bank of India has increased the interest rates to control inflation. But still these interest rates are not so high that, you should not think of taking a home loan.
In the coming time, the Reserve Bank of India may increase the interest rates even more. In such a situation, this can be the right time to take a home loan. Home loan rates are not going to go below this for the coming 2 to 3 years. In such a situation, if you need a home loan now, then you should take a home loan.
If you are taking a home loan now, then you can also get the benefit of Pradhan Mantri Awas Yojana. In which you can get interest rebate ranging from 3% to 6%. If this happens then your home loan EMI will come down even more. Pradhan Mantri Awas Yojana has been extended till March 2022. In such a situation, you should take advantage of this scheme as soon as possible. However, this will happen only if you own the first residential property.
How Much Home Loan Should You Take?
Right now the question arises here that how much home loan should you take according to your need? It has a simple formula. By the way, many people get confused about the home loan amount and even take more home loan than necessary. After which they have to make interest payment.
First of all understand your need. Take home loan as per your need. Remember, if you take more home loan, you will have to do it without unnecessary interest. Which doesn’t make any sense.
There is one more formula you can apply for availing a home loan. If you are taking a home loan, look at your salary. You prefer to take home loan only 25% of your salary. If you take more home loan than this, then you face problem in making MI payment.
Although some experts even take up to 30%. But you can keep a 5% scope for any difficulty that comes your way. In which there are car loans and other types of financial problems.
We explain to you by giving an example. For example, if your salary is ₹ 20000 per month, then you should take a home loan only 25% of it. If you are taking a loan of ₹ 100000 as a home loan, then you have to pay ₹ 850 per month as EMI. If you have a salary of ₹ 20000, then you can take a loan up to Rs 1500000. This could be a comfortable John for you.
Even after this, if you need to take more loan, then you will have to increase your income. Or work for some other source. If you do not do this, your lifestyle may be affected. Which will not be the right decision at any cost.
How much home loan should you take against your salary? You can also check this in one click on Google. There are many home loan calculators available these days. You will also find the option of home loan calculator on the bank’s website. Apart from this, when you go to your bank and talk, then you will be explained this math of home loan there too.
Home Loan Interest Rate
If you choose to take a home loan now, you may see an interest rate of around 8%. Which is quite right. If you take advantage of Pradhan Mantri Awas Yojana, then you can get a minimum rebate of 3% in it. It depends on which slab your income falls in.
If you buy a property by taking a home loan, then you also get an income tax exemption of ₹ 200000 in 1 year on interest. If you want to avail this exemption then you should take a home loan.
What are the things to keep in mind while taking a home loan?
We can easily choose a good home loan provider by taking care of many things. The first and foremost thing is that the interest rate available on the home loan should be the lowest in the market.
However, make sure that your home loan provider is reliable. Now you can take home loan from any registered private or government bank in India.
Banks generally offer two types of home loans in India. First there are fixed interest rate home loans and secondly there are floating home loans. Now let us try to understand here what is the basic difference between these two home loans?
Fixed rate home loan
They are fixed rate home loans. In which the interest rates are fixed at the time of taking the loan. Now whether the home loan interest rates in the market are low or high, it is not going to affect you. Unless your home loan is completely repaid. Your home home loan interest rates will remain fixed. This helps you calculate how much you need to save for a home loan in 1 month.
You don’t need to keep an eye on the market and RBI for this. Because RBI keeps making changes in its monetary policy regarding interest rates. Due to which banks also have to change the interest rates.
If you want to avoid all these problems, then you can opt for a fixed rate home loan.
Floating Home Loan Rates
Floating home loan rates are those which are market influenced. If the interest rates of home loan interest rates are lower in the market, then your EMI also goes down. But if the interest rates increase, your home loan EMI also increases.
Now the question arises here that which home loan EMI should you take? We will suggest you to take a floating home loan EMI.
The biggest reason for this is that if you take a fixed rate home loan, it is already increased by up to 2%. Banks make this increase by looking at the future.
A floating home loan makes you a little cheaper than a fixed rate home loan.
Another advantage with a floating home loan is that there are no prepayment charges. If your salary increases. Or if your income increases due to any reason, you can pay off your loan ahead of time. In such a situation, you do not need to pay any kind of charges to the bank. You get additional flexibility with a floating home loan. Which you do not get with a fixed rate home loan.
However, if there is an increase in HD interest rates in the coming time, then it may also increase. Do keep this thing in mind.
Banks and housing finance companies charge you processing charges on home loans. Sometimes these processing charges range from one to 2% as well. In such a situation, you can bargain for processing charges while taking a home loan. And you get a good discount.
You are also given a 100% discount on processing charges during festivals. In such a situation, you can also wait for any offer. Banks like State Bank of India HDFC come with zero processing fee structure from time to time. At that time you can take a home loan. This gives you a complete waiver on processing charges.
If you don’t get full discount. Even then you can go and talk to the bank. And can demand that you do not want to pay the processing charges. Or just want to give less. Banks usually agree to do so.
Nowadays most of the home loan facilities are available to you online. But first you should check the service of that bank. Remember that most services should be online. Because of this, you will not have to make frequent trips to the bank.
Many times it is seen that the service of the bank is good. But the branch from which you are choosing to take home loan. His service is not good. In such a situation, you should first check the service of the bank thoroughly.
If you are studying to take costly home loan from 0.1% to 0.2% from any bank. Even then you prefer to take a home loan from the same bank or branch. It will be good for you in the long term. You will not have to go to the bank again and again.
Nowadays most of the banks automatically deduct EMI from your bank account. If this feature is also present in your bank, then it will be very beneficial for you. Otherwise, you will have to pay your home loan EMI by visiting the branch. Which is going to be a very bad decision.
interest rate pass on speed
Interest rate is an important component of any loan. In such a situation, you should check how soon your bank passes on the interest rate to its customers. This becomes even more important for you if you are taking a floating home loan.
It is seen many times that even after reducing the interest rates of Reserve Bank of India, banks do not pass on the benefit to the customers. And increase your margin.
If you have a floating home loan, it can cost you quite a bit.
If you search on Google, then you will easily get the track record of banks. Which bank has the best track record. You prefer to take home loan from there. This can be a good decision for you in the long term.
Some banks may initially offer you a home loan at a lower interest rate. But they do not give you the facility of interest rate pass on. In such a situation, it could be a bad decision for you in the long term.
It is seen many times that the interest rate is reduced by the RBI. Banks don’t do that much. For example, if RBI has reduced interest rates by 1%, then banks do it by 0.50%. In this case, the margin of the bank increases by 0.50% on your home loan. Due to which you are going to suffer a direct loss on your home loan EMI.
home loan transfer
Apart from the interest rate, you should also check how your home loan transfer facility is provided by your bank. Nowadays most of the banks are providing the facility of home loan transfer online. But still some banks have made the facility of home loan transfer very difficult.
In such a situation, if any bank is offering you the facility of home loan at low interest rate in future, then even if you want, you will not be able to transfer your home loan there for a very long time. Due to which you may have to suffer direct loss.
home loan insurance
Whenever you take a home loan, make sure to get it insured. If you have paid your EMI for a long time. And if you die due to some reason, then this home loan insurance comes in handy for you.
Suppose after your death your family member is unable to repay that home loan. Then they may have to face difficulties. Maybe that house can be taken away from them.
Therefore, it is important that you get your home loan insured. So that after your death, the insurance company pays your EMI to the bank. Home loan insurance has become very cheap these days. And it is also in vogue. Keeping in view the future security, you must get home loan insurance.
Should You Make Early Home Loan Repayment?
It is seen many times that after taking a home loan, your income increases. In such a situation, you think that repayment should be done soon. That is, all the installments should be paid together. So that you can get rid of the upcoming monthly EMI.
If you want to make early repayment of your home loan, there are a few things you should keep in mind.
First of all, you should see which slab of income tax you fall in. If you fall in the 15% income tax slab, then you should not pay your MI early.
Because you get a discount of ₹ 200000 per annum on the interest of your EMI. Apart from this, if you have taken advantage of government schemes on home loan. Even then you should not make early home loan repayment. Because by taking advantage of government schemes, you can bring your home loan interest rates down to 3% or even less.
In such a situation, you will easily get up to 6% interest on your FD too. In this case also you are going to get 3% profit.
In this way, you can easily pay your home loan EMI without any interest. But if you fall in the high income tax slab, then you should consider early home loan repayment.