A roof over one’s head is a cherished dream of every individual. For an average salaried employee in India, this dream takes years to realise. This is because one must prepare oneself financially well in advance to be able to make a down payment on the property chosen. Further, an individual must ensure that he is able to enter into a long term commitment of making regular repayments on his home loan.
To ensure creditworthiness, it is important for an individual to ensure that his CIBIL score is 750 and above (out of 900). This will only be possible if one has maintained a good credit track record of making repayments on existing lines of credit, i.e making regular repayments on outstanding credit card balances and repayments on other existing loans.
If you are aware of all these requisites to make a home loan application, have worked hard at saving up for your down payment but are sitting on the fence wondering whether or not it is the right time to apply for a loan, here are two major reasons why you should apply for one from a reputed creditor such as an HDFC home loan, without any delay. In fact, it would be prudent to make your move before the close of the financial year in March.
The real estate sector has been strengthened
The real estate sector in India went through an overhaul last year. Two major regulations, namely Real Estate Regulation and Development Act (RERA) and a new unified indirect tax regime Goods and Services Tax (GST) were implemented in 2017. While RERA was introduced protect the interest of homebuyers and boost investments, GST, the new tax regime brought in transparency and has lent credibility to the realty sector, that has thus been characterised with opacity. While the implementation of these two major regulatory changes brought about a temporary blip in demand, there can be no denial of the fact that the implementation of these has gone a long way to add credibility and strengthen the sector.
The other exciting trend that is dominating the realty market is the boost to affordable housing. Over the past year, the Government has taken many steps to boost the affordable housing segment. Firstly, infrastructure status has been granted to the affordable housing segment, which gives better access to funding to developers, the benefits of which will augur well in the long run to homeowners. Secondly, following the goal of “Housing for all by 2022” under the Pradhan Mantri Awas Yojna (urban) extended the Credit Linked Subsidy Scheme to the middle income group 1 and 2. According to the new dikatat, the carpet area of the houses has been enhanced from 90 square meters (sqmt) to 120 sqmt for the MIG 1 category while the carpet area has been increased to 150 sqmt from the current 110 sqmt for the MIG-2 segment. This means that the borrower can not only avail of the subsidy upfront and thus avail of a home loan at a lower rate of interest but can buy bigger houses under the same rate of interest.
These initiatives have strengthened the affordable housing market and developers are catering to the interests of potential homebuyers in the segment. This has buoyed the entire realty segment and buyer sentiment. Therefore, those seeking a home loan, may thus find this an opportune moment to close a deal. Especially, if your preparation is right, there are little chances of going wrong with an HDFC home loan.
Interest rates are attractive
The second and more compelling reason to avail of a home loan before the close of the financial year is that the interest rates may be firming up in the second half of the ensuing financial year. Even if this doesn’t mean an immediate transition to home loan rates, it can be said with certainty that interest rates will not go any lower hereon. Over the past two years, home loan rates have dipped upto 200 basis points.
As a result, the country’s largest lender the State Bank of India brought down its MCLR or marginal cost based lending rate by five basis points, compelling other lenders to rethink their lending strategies. Additionally, SBI has also announced its decision to extend its ongoing waiver on home loan processing fees till March 31, 2018, on January 1st, 2018. This move has nudged its competitors, and other top lenders are expected to follow suit soon. This window may, however, be short-lived and a buyer must make a move before the close of the financial year.
Thus if you are prepared to make a down payment on your loan and your CIBIL score is satisfactory, it is best to go ahead and make an application for a loan for the purchase of a home before the close of the financial year.
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