Housing Loan Rates Have Reduced. Should You Rent or Buy a House?
Demonetisation has led to a drop in housing loan rates. So, this may be the best year to buy your first home. Rented apartments are the first choice in many Indian cities. This includes Delhi, Mumbai, and Bangalore. Properties in urban India are expensive, but things are set to change soon. This article tells you the best time to buy a home.
Should You Buy or Should You Rent?
The ArthaYantra Buy versus Rent Report looks at what is more practical. Is it renting a house? Or is it buying one? The 2017 Report looked at 12 different property locations in India.
The report shows how many square feet you can buy for Rs 1 lakh in the following cities:
When Should You Rent and When Should You Buy?
Do you live in Jaipur, Lucknow, Ahmedabad, or Kochi? Is your total household earning more than Rs 8 lakh per year? Then you should buy a house.
A Bengaluru resident needs an annual household income of over Rs 12 lakh. Only then will buying a house be a reasonable option. Property prices in Bengaluru have fallen. In fact, it is a good idea to buy now rather than rent.
Kolkata is an affordable city. When should you think about buying a house? Do so if your household income is more than Rs 14 lakh per year.
A household income of over Rs 16 lakh per year in Chennai puts you in a good position. Then you can buy your own house.
If you dwell in Delhi, know that buying and renting are both expensive. Think about buying if your income is more than Rs 16 lakh per year. As property prices have fallen, this is an ideal time to buy a house.
Mumbai is the most expensive city in India to buy or rent. Buy a house if your household income is Rs 25 lakh per year. Property prices have dropped in Mumbai as well.
Indore and Hyderabad are the best cities to buy a house. They give you the highest square feet per Rs 1 lakh.
Do You Qualify for a Home Loan?
The government is introducing more housing opportunities now. These target the middle-income and lower-middle-income classes. Besides, interest rates will also go down and property prices are dropping. This could be the ideal time to qualify for a Home Loan.
What are the Factors Deciding Your Home Loan Eligibility Criteria?
While sanctioning your Home Loan, banks and NBFCs will look at the following factors:
- Your Age: Lenders prefer younger applicants. They look for people who have a minimum of 10 to 15 years before retirement. Your age will also decide the term of your loan.
- Your Monthly Income: Your monthly income decides your loan amount. Your EMI will not be more than 40% to 50% of your monthly income. Lenders will ask to see your salary slips for the last three months. Thus, they will check your monthly income.
- Your Credit Score: Do you have a good credit score? This will encourage banks and NBFCs to reduce your interest rate. Your EMI and overall debt will also reduce.
- Your Educational Qualifications: Higher degrees in education lead to higher positions in your career. This increases your earning capacity. So, banks and NBFCs look at your educational qualifications while considering your loan.
- Your Employer: Will the lender sanction your loan? What will be your interest rate? The status of your employer can make a huge difference in such decisions. Do you work with a top-category company like Infosys and Accenture? Then you may get a reduced interest rate. Suppose you work in a top-category company but your salary is low. It will be easier for you to get a loan.
- Your Job Stability: Are you stable in your employment? Or do you regularly change jobs? Lenders prefer those who remain in one job for longer.
- Your Dependents: How many dependents do you have? Lenders consider this while sanctioning your loan.
- Any Debts: Debts reduce your repayment capacity. Your loan amount may reduce depending on how much debt you owe.
The current housing loan rates are encouraging for buying a property. Do you earn more than the minimum amount at the property locations mentioned in this article? Do you have a good credit score? Then this is a good time to invest in your future.