Top Factors Pushing Housing Loan Market in India

In these challenging times of global economic crisis where businesses and markets have seen a drastic downward phase due to the rapid arrival of the COVID-19 virus on the horizon, it has significantly harmed the Indian real estate sector that was already affected by issues such as cash constraints, regulatory and procedural reforms. However, given the current situation, it is reassuring to see that experts believe the house loan industry in India would grow at a CAGR of roughly 22%.

The main forces driving the housing loan sector in India are the salaried/business class, cheap home loan interest rates, enticing developer schemes, monetary measures, government policies, regulatory backing and shortage of housing in India.

1. Salaried and Business Class- This section has realised the importance of residential rental payments equivalent to the EMIs that they will be required to pay for their properties. As a result of the circumstance, more people purchase residential spaces using home loans rather than renting.

2. Lower Home Loan Interest Rates- They are the key drivers of the home loan market. India continues to have one of the lowest home loan interest rates in the world. It currently has the lowest home loan interest rate among emerging countries. Indians are investing in real estate due to the decline in interest rates offered on savings and FDs.

3. Enticing Developer Schemes- Such schemes are another factor that encourages buyers to take home loans with the availability of enticing building incentives. It includes late EMI payments and programs depending on construction.

4. Monetary Measures- They are yet another factor pushing the market. The Reserve Bank’s economic policies are propelling the Indian home loan industry. The country has already seen higher-ever repo and reverses repo rate reductions to provide effective relief during COVID-19.

5. Multiple Government Policies- Policies like the Pradhan Mantri Awas Yojana (PMAY) is devoted to its objective of “Housing for All”, under which the Credit Linked Subsidy Scheme (CLSS) for the Middle-Income Group (MIG) has been extended until March 2021 as a result of this.

With this knowledge of the various factors pushing the home loan market in India, select the best institution offering the most economical financial instrument for loan purchase. Being aware of this information will help in making an informed decision, enabling the loan applicant to find the most suitable Home Loan option.

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Here Are 4 Things to Consider When Applying for a Housing Loan

If this is your first home loan, you may have many questions, and there's a good possibility you'll overlook certain important considerations. We've done the legwork for you and compiled a list of everything you need to know before applying for a housing loan in India- 

1. The eligibility criteria- For home loans, different lending organisations have different eligibility standards. The age brackets for loan approval and the income requirements are the most important factors to consider when availing housing loan. This is because both are inextricably linked to a person's earning potential and ability to make timely payments.

2. Credit score- Borrowers with a high credit score may qualify for a cheaper interest rate on home loans from some banks. Your credit history can assist you in obtaining a better home loan deal from a bank. Most banks and other lenders regard a credit score of 750 and above to be a good credit score as a rule of thumb.

3. Your budget, down payment and EMI- Define your home-buying budget, including how much money you can put down as a down payment and how much of a mortgage you'll need. Next, determine the EMI range that you are comfortable with, as this will aid in determining the loan's term. Finally, you can use online home loan EMI calculators to experiment with different possibilities.

4. Documents required- Lenders will also want you to produce paperwork demonstrating your eligibility. Again, the necessary documents for a home loan may vary by lender, but the following are the most common:

• KYC documents like Aadhaar card, PAN card, election card, and others

•  Address proof like utility bills

•  Identity proof like driving license, election card, and others 

•  Passport size photograph

•  Income proof like Form 16 or salary slips for the salaried and last 6 months’ bank account and financial statements for the self-employed

• Business proof for the self-employed

With trusted Indian Companies offering housing loans avail, the Mortgage Loan at minimal documentation procedure and flexible repayment tenure. Use the Home Loan EMI calculator to estimate your monthly outflows and improve financial management, along with taking advantage of various housing schemes in India. To qualify, simply meet the easy home loan eligibility criteria and submit the documentation required to process the loan and await loan approval.

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Lesser-known Pointers That Can Affect Their Home Loan Rates

If a family wishes to buy a house with the help of home loans in India, they may do so and move into the home of their dreams. However, the option comes with house loan interest, which the borrower must pay in addition to the EMI amount during the loan term. It means that their home loan EMI has a long-term impact on their income and expenses. They might get the lowest home loan interest rate if their CIBIL score is higher. They can pay lower EMIs and better manage their spending if they get the best home loan interest rate. When it comes to home loan applications in India, the CIBIL score is one of the most crucial indicators that lenders assess. For the best home loan interest rate, a CIBIL score of 750 or more is suggested. Borrowers may improve their CIBIL score by repaying their loan EMIs and other bills on time. 

The following elements that lenders may consider when determining a borrower’s interest rate are the location and value of the residence. For example, the value of a property may increase if it is located in an area with growing infrastructure and facilities. Additionally, a property’s value may be higher if it is close to an airport, a train station, or a bus stop. Therefore, the approved house financing amount may be higher in this scenario due to the lowest housing loan interest rate.

If borrowers use their credit cards for several transactions and make timely payments, their credit score may arise. This can help them get the highest interest rate on their home loan. However, if they use a credit card even if they pay the minimum due on time, the interest rate on their home loan would be higher. Therefore, they should spend more than 40% of their credit limit if they have any loans to apply for and desire a lower rate.

Compare all available home loan offers on a third-party website and choose the one that best meets finance needs and payments capacity. If the applicants follow the advice mentioned above, they should get the best home loan interest rate and pay lower EMIs. Choose from numerous Housing finance companies which have low-interest rates, a 30-year tenor, a high-value sanction, and the option to transfer home loan balances. Simply meet the primary home loan eligibility requirements, submit the required paperwork, and wait for the loan to be authorised.

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Top Factors that Can Increase Their Home Loan Eligibility

Borrowers need to meet certain eligibility criteria for getting housing loan from banks and financial organisations. The eligibility criteria set by banks and Housing Finance Companies are too high to reduce the number of non-functioning assets of the financial organisations. These eligibility criteria include a good credit score, work experience, the person’s income, previous loans if any, citizenship, and much more.

 In addition, various documents need to be submitted by them to the loan provider to prove their eligibility. These include KYC documents, Income proofs, passport size photographs, and proof of the existence of business from the last five years (in the case of self-employed individuals), account statements, and much more. Loan is not granted to the people who cannot prove their eligibility.

Various factors help in increasing the home loan eligibility, which includes the following:

• Adding a co-applicant, in this case, if a person is not eligible as per the financial organisation’s criteria, they can add a co-applicant such as a family member to increase their chances. 

• Maintaining a credit score above 750, this includes paying regular credit card and debts. If a person has a credit score of around 800, companies tend to provide them loans easily. 

• Choose a longer tenure, A borrower who chooses a longer term for repayment has more chances of securing a loan than the person who prefers a smaller tenure. 

• Declare their additional income sources. A person with more income sources gets a loan easily as it shows a high repayment capacity.

If a person wants to increase their chances of meeting the home loan eligibility criteria, they should fulfill all the above criteria. 

With these housing loan facts in hand, the borrower will be able to spot an advantageous deal. A great home loan will include a low-interest rate, a tenor of up to 30 years, a high-value sanction, and a Home Loan Balance Transfer facility. To qualify, simply meet the easy home loan eligibility criteria, and submit the minimal documentation required to process the loan and await loan approval.

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