Many home buyers have posed the same question every year: Is this the right time to buy a home? What about this year? According to credit rating agency CRISIL, it was never more affordable to buy a home in India than at this time.
If you were a middle-class, salaried individual 10 years ago, owning a home or buying a property in India, especially in the cities, was a distant dream. Property prices were dashing at breakneck speed and savings and household income couldn’t match that speed. With no sight of prices coming down, home buyers had to satisfy themselves with whatever they could afford before prices went out of reach.
Ten years later, we are sitting atop a property downturn and increasing income that allows the salaried middle-class to renew their hopes and dreams of owning a home with amazing property deals. While property prices have remained stagnant there has been an increase in household income. Also, lower home loan interest rates and government programs such as the Credit-Linked Subsidy Scheme (CLSS) have made buying a home more affordable.
According to CRISIL, property affordability will come down to 6-8 times in 2019 compared to 11-13 times in 2014. In simple terms, it means that the average cost of property was 11-13 times the annual household income in most cities in 2014; it’s 6-8 times in 2019. It was never a better time to buy a property in India, but there are a few things you need to consider before you decide on buying one.
Assess your home loan eligibility
Though it may sound obvious, first look at a property that is valued proportionately to your monthly income. If your EMI value is over 60-65% of your salary, the lender will completely reject your loan. Your loan amount is generally fixed by the lender based on the property value or your loan amount eligibility, whichever is lower. You can check home loan eligibility with Bajaj Finserv home loan eligibility calculator at Finserv MARKETS.
Carry out proper due diligence
As you scout for a property, make sure that it’s approved by leading banks, non-banking finance companies (NBFCs) and housing finance companies (HFCs). Understand that lenders make loan approval decisions based also on the property’s geography, type and title. If you are buying a ready-to-move place, get the plans and title deeds verified from a professional. Avoid buying property in areas that are designated negative territory by leading financial institutions. Carrying out proper due diligence before you buy the property will not only help you ensure loan approval but also help you protect yourself from fraudulent activities.
Check your credit score
Check your credit score before applying for a home loan. Financial institutions prefer loan-applicants with a minimum credit score of 750 for a home loan; chances of rejection increase if you score below that value. According to CIBIL, 79% of loans are sanctioned to people having a credit score of 750 and above. If you feel that your CIBIL credit score is not justified or if there are any irregularities, you can request a review and get it corrected.
Compare available offers and terms
Just like homes, home loans come in different shapes and sizes. Just because you have been offered a loan doesn’t mean you have got the best deal. Go beyond interest rates, processing charges and prepayment penalties. Compare the quality of their customer service, transparency, speed of approval and documentation requirements. Don’t just rely on verbal promises but make sure that all the terms and conditions are in black and white.
A Bajaj Finserv home loan comes with an assurance of excellent customer service, quick turnaround time and minimal documentation. Prompt property due diligence and fast and accurate evaluation by in-house experts ensure that loan disbursal time is kept at a minimum.
Take advantage of government schemes
Under the Pradhan Mantri Awas Yojana (PMAY), the government offers the Credit-Linked Subsidy Scheme (CLSS) to loan applicants in three income groups:
- Below Rs.6 lakh per annum
- Between Rs.6-12 lakh per annum
- Between Rs.12-18 lakh per annum
The following table shows how home loan borrowers can take advantage of the CLSS.
Interest Subvention Scheme (Max loan tenure of 20 yrs.)
|Particulars||MIG 2||MIG 1|
|Annual household income||Rs.12-18 lakh||Rs.6-12 lakh|
|Eligible loan amount for interest subsidy||Rs.12 lakh||Rs.9 lakh|
|Net present value subsidy||Rs.2.3 lakh||Rs.2.35 lakh|
A home loan on Finserv MARKETS can turn you from a tenant to a proud homeowner in a few days. With a Bajaj Finserv home loan you can opt for loan tenure up to 25 years with zero prepayment charges. If you are a first-time applicant, you can get additional benefits of reduced EMIs and interest rates subsidies up to 6.93% under Pradhan Mantri Awas Yojana (PMAY).
Also, read about home loan process.
Finserv MARKETS, from the house of Bajaj Finserv, is an exclusive online supermarket for all your personal and financial needs. We understand that every individual is different and thus when you plan to achieve your life goals or shop for the gadget of your dreams, we believe in helping you Make it Happen in a few simple clicks. Simple and fast loan application processes, seamless, hassle-free claim-settlements, no cost EMIs, 4 hours product delivery and numerous other benefits. Loans, Insurance, Investment and an exclusive EMI store, all under one roof – anytime, anywhere!