Optimism in the Indian home loan market

The Indian consumer is sensitive to issues of long term debt. Hence the first factor to be considered is the amount of money one will have to shell out every month towards a home loan. Also important is to keep in mind is how much cash one can afford as down payment for the initial purchase of a house.

The government has taken initiative of making housing affordable by providing huge tax benefits. The housing finance companies in India have responded warmly by lowering their lending rates. All banks and most financial institutions offering home loans have their own websites to enable home seekers a convenient way of checking the various rates and avail of the best loan. State Bank of India, IDBI, HDFC, Punjab National Bank, LIC Housing Finance Ltd. and some finance companies have a number of schemes across all categories of housing requirements most important of which are the purchase of flats, construction of residential houses and also for repairs, renovations, additions and alterations/improvements.

The strong presence of so many housing companies in the market has induced a healthy competition thereby making the finance seeker go for the best bargain. Generally, the interest rate charged by the banks, financial institutions and finance companies and so on stay close to the interest rates that seem to be prevailing in the market.

RBI has made higher provisioning requirements for real estate loans for banks. Thus in a market scenario that constantly drives estate prices and home loans rates in the upward direction, the general notion is that demand will be fairly strong and home borrowers would continue to be there due to robust fundamental demand and limited supply. One of the predictions is that for every 0.50% increase in the interest rate, there will be a decrease in demand by about seven percent, though. Rather than increase rates, some banks have thought of increasing EMI i.e. Equated Monthly Installments or reducing the loan repayment period.

Pre-checks you need to make before availing home loans:

Balance Transfer: To avail of advantages associated with housing loan many borrowers rush in to pay up their loan amounts before maturity and write off debts. The housing loans are typically long term in nature and give the benefit to house buyer. If you decide to pre pay your loan, time it carefully.

The house inspection: Before taking into possession, the house should be a perfectly investigated by self, family members and an expert who can verify the things such as Cracks on walls, leaking roofs, bad wiring etc. on buying a house. House improvement loans finance the cost of tiling, plumbing, electrical work, grills, woodwork, painting, compound walls and almost all improvements.

Terms and Conditions: Read your home loans agreement cautiously and determine the mode of interest levied on your loan. Save yourself from an inflated cost on it. Make sure that you read the documents and the agreement well enough before signing. Make sure that all the various terms, interest rates and installment dates are clear to you. See if there are hidden charges involved.

Your home checklist should include making a serious investigation for legal and physical aspects, the authority approval details of the building plans and the progress of the work, title deed of the land where the building is to be constructed or is being constructed, the past track record of the builder in delivering on time when you are purchasing, the quality of construction material used by the builders for construction and its proportion as well as stamp duty and registration charges applied.

Against this backdrop, a home loan cover that insures the home loan undertaken immediately is a blessing. The cover can be used to secure the liability and is beneficial to all availing home loans. One can apply soon after opting for a home loan. The loan cover provides a lump sum on death of the life assured during the term of the plan. Some life insurance companies, however, provide the home loan cover under term plans.

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