The last five years has seen a multi-fold increase in real estate properties.  This phenomenon is observed with a reason.  The availability of home loans has been so easy that almost anyone earning a decent amount of money can afford them to purchase dream homes. What does it take for you to avail of a home loan?  Please note that not everyone earning well can get a home loans.

Conditions for an individual to avail of a home loan

• Make sure your credit history is intact – Most financial institutions in India report cases of credit default. Your name and details would be reported to a central database if you have defaulted in any of your credit card or loan repayments. If you have a case of credit card or any other default, make sure to clear or settle the dues immediately.


• Apply for home loans with a check on the income – Understand your income clearly. If you earn Rupees 2 lac per annum, applying for home loans worth Rupees 50 lacs may not make sense at all. As per calculations, a 50 lacs loan to be repaid over 20 years will cost you about Rupees 19,000 every month. No bank would give a loan with this kind of profile.


• Check the property and its documents before applying for home loans – Banks give loans for properties that are complete in their documents. Be sure to check a property’s NOC (No Objection Certificate), Municipal Clearance and other documents before applying for a loan. Remember, lack of completeness of these documents could also lead to rejection of your loan.


• Choose between Fixed Rate and Floating Rate of Interest – Couple of years before, the rate of interest on a home loan in India was about 7%. A lot of people opted for Floating Rate of interest then on the assumption that the rates would go down further. The same customer today has seen a quantum jump in their interest rates resulting in a higher Equated Monthly Installment.
  
  As is, the current fixed interest rate for availing home loans is 13.5-14.25% per annum. Financial analysts have predicted this to be stable for the next two years after which minor corrections can be seen.

Experts’ Analysis

Financial Experts are divided over the opinion if this is the right time for one to apply for home loans.  Property prices in most major cities have gone down by 25% over the last 1 year.  They observe that these prices could go down further by another 20-25% and the whole correction would take at least 5-10 years.  Costly lending rates of the home loan have been forcing a lot of individuals to think more than twice before taking a home loan.

Taking a home loan is the easiest way of you purchasing your dream home.  Most middle-class individuals do not have the amount of money to buy a home paying the money upfront.  Home loan provides a very good alternative for people who wish to buy their dream home