Best buy to buy a house

by | Nov 12, 2020

Owning a home will instil a sense of emotional security, financial affluence, and reflects the keystone of wealth. Indeed, owning a house will be on top of the minds of many, especially given the prevailing situation. But somewhere the ardent desire to own a house was put on the backburner owing to a shift in choices and priority. New age customers have grown adventurous and prioritize extravagance over conservatism.

 

Having to live through the unprecedented times of the covid 19 pandemics, there is a collective acknowledgement that possessing an own house will offer the right measure of stability and security. In present times, where people have to reckon with job loss and financial insecurity, asking them a financial commitment that would demand their entire life’s savings is a bit farfetched. On the flip side, it is a secure way of creating assets in uncertain times like this. In fact, real estate investments have always proved to be a reliable investment destination in comparison to other options like equity and commodities.

 

In India, homes were always construed to be integral to one’s lives and a reliable tangible asset class unlike other asset options, which are comparatively more volatile. Thus, would make people inclined towards real estate at large.

 

Owning a house for many has never been an option but a dire necessity. More so, residential real estate has turned out to be the best bet at this juncture, where the crisis of pandemic looms large. Residential real estate offers respectable returns with lower risks. A public poll that was conducted by a private agency on Twitter revealed that 76% of respondents choose residential real estate over other asset classes, mainly due to the safety it offered. The poll conducted on Twitter stood testimony for the trend that is unfolding in the market off-late with respect to residential real estate.

 

Affordability and Livability

The price of the unit and the cost of mobilizing required finances will determine the off-take in the residential real estate. The home loan since the last decade has been a bit costly, it was hovering at around 9% to 12%. With the scourge of pandemic ever-increasing, the entire economic set-up has gone for a toss. In order to revive the economy, RBI has taken a few crucial measures. Slashing the repo rates by 115 basis points in recent months has done well for the prospective home buyers to avail of loans at competitive prices. Since the interest rates have seen considerable downgrades, it has proportionately reduced the burden on the home loan seekers. Residential real estate has truly turned out to be affordable for many in the country.

 

Many banks have also relaxed norms insofar as provisioning increased quantum of the loan amount to the home buyers off late. It is advisable for all those who were waiting for the right time to make investments in real estate, to make the best use of the situation and reap optimum returns. Buying a home is not just an investment decision but a sense of emotional comfort. With housing loans available at competitive rates, one could look for larger spaces or use the money saved from reduced EMIs for getting interiors done for their new/existing property. On top of it, one can avail of a top-up loan with the help of saving resulted from reduced EMI. This will provide the necessary leeway for the home buyer to sort out the finances comfortably. Given the prevailing situation and the support provided by the central government and RBI, mid-segment residential real estate is expected to emerge as the most sought after for homebuyers in recent times. Moreover, as the new trend unfolds, there will be expected delays in the completion of under-constructed projects, due to the issues of labour and logistics, an offshoot of the pandemic. Resulting in consumers showing traction towards ready-homes and playing it safe in the market, which otherwise is mired with conflicts and complications.

 

There are many factors that are stacked up in favour of prospective home buyers to avail of home loans. Borrowers are now offered the choice of opting for a fixed or floating rate of interest. Finance experts are of the opinion that, it would be beneficial for the borrowers to choose a fixed rate, which is available at an all-time low. The economic situation in the country has always been volatile and vulnerable to many exigent factors. This will directly impact the interest rate regime of RBI. if the interest rate moves upwards, the persons who had opted for a floating rate of interest will be at a disadvantage.

 

There is also something installed for the one’s who are looking for investment opportunities in real estate. In major investment metropolitan cities like Mumbai, Chennai, and Hyderabad the rental incomes have risen considerably. By some approximation, a ratio of rental income to the capital value of the property stands at 2.5% for affordable and mid-segment homes. With home loans anyway around 7.0% to 7.5%, if a home is bought for rental purposes and earns 5%, it ends up in a win-win situation. It ensures that the income from the real estate bought will surpass the inflation by a comfortable margin. There are a good number of factors, that are aligned in one’s favour who are considering real estate as an investment destination.

 

As an icing on the cake, many developers are offering additional benefits and attractive gifts, in order to lure the customers in this festive season. For example, the initiatives like “Apna Ghar Apna Desh” by a well-known developer provides for an additional rebate of 1.5% for home loans. Thus ensuring considerable savings through reduced EMIs.

 

For all those who were waiting with bated breath for the right opportunity to buy homes, this is the lifetime opportunity they can’t afford to miss. For most buying a house may be the single biggest financial commitment in their lives. At this juncture, it is easier for them to attend to the commitment. The current scenario, it has turned out to be a buyer’s market and they shall make their dream of owning a house come true. 

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