Understanding Current Housing Market Scenario (2024)

Thousands of people who had postponed their decisions to buy a residential property are now having a change of mind. And this change of mind is due to stagnant property prices and low borrowing costs.

If you too are planning to buy a new property on loan, that too for the first time, then we have some tips for you:

• Lenders want you to bring at least 15-20% as down payment. If possible, increase this down payment (to more than 20%) so that your loan amount is reduced. Remember that bigger the down payment, smaller will be your EMI and therefore, lesser will be the stress on your monthly finances.
• But don’t go overboard trying to make a bigger down payment. Do not take out money from your savings earmarked for other critical goals like retirement, children’s education, etc.
• Lenders avoid giving loans which will result in total monthly EMIs exceeding 40% of the net take home pay. So your willingness to pay higher EMI may not find acceptance with lender’s assessment of your ability to repay. So do not apply for a very large where EMI comes out to be more than 30-35% of your net monthly income.
• Final loan rate offered by lenders depends on several factors including your credit score (history). So check your score before applying for the loan. If it’s not good, the rate of interest may be higher. In such case, you are better of taking some time to repair your credit score and then apply for the loan.
• Even a small reduction in home loan interest rate can save you lacs of rupees over the full loan tenure. So do your research and find lenders that offer lower rates. These days, some NBFC companies offer loans at rates lower than those offered by banks. So shop around for the loan.
• When you are repaying a home loan, at times your monthly finances might become stretched. So it’s always advisable to keep 2-3 months worth of EMI saved up as backup. Such savings come in very handy in times of need.

Property purchase is one of the biggest financial decisions of your life. So being financial prudent about it is absolutely necessary. And if you take cognizance of these tips, you will be smartly managing your home loan.