Ever since the evolution of mankind, there are three basic necessities of life, food, water and shelter. Out of these, shelter has become the most crucial one in today’s world. This is mainly because of the ever increasing population of the metro cities and also the thirst for buying more and more land than a person actually needs (read weekend homes, penthouses etc). Roughly speaking, all the developing cities like Thane, Navi Mumbai, Pune etc, are densely populated with immigrants from all over the globe. You can think of the most obscure place in the dense forests near Ghodbunder road in Thane, and you will still find one residential complex, either in its completion stage or awaiting its incubates.
Suburbs gaining fast popularity among the new buyers are Ambernath, Badlapur, Titwala, and even places such as Bhadwad, Temghar in and around Bhiwandi (popularly known as Upper Thane), Bhayander, Virar etc. Also Dive – Shil road, Palghar, Vasai thus offering wider range of options for the populace. People opt for these destinations either as a weekend home or for investment purpose, since the returns on these flats is high. And plus there are also young buyers who are drawn to these projects because of their affordability and the easy accessibility to the metros.
This has given rise to the hunt for a brand new market of real estate consultants. These real estate consultants make your life happier as they appear to fulfil your dreams within no time. However as you go deeper in understanding about the procedures about buying the coveted property, you feel it’s a Herculean task that can never be accomplished.
Home loan plays a vital role in the real estate industry. There is a whole ocean full of bankers with attractive schemes and packages to suit every individual’s need. And here’s where you need an expert advice from an established home loan company. Ideally a home loan advisor should be able to guide you through all the tedious banking work and also discuss the pros and cons on a personal level. Once these guys understand your intention behind buying a particular property, they are in a better position to explain you. They can offer you the best possible deal because they are mostly multi brand DSA’s who have their tie ups with many leading financial institutions.
The joint family system has almost become extinct now, and today we come across young couples availing sizeable home loans for their cozy nests. In fact I meet people who submit their marriage invitation card and give us an undertaking stating that the marriage certificate will be submitted before the disbursal of the loan. Single women have also become aware of investing in real estate and are eager to buy properties. The mindset of people at large seems to have changed over the years.
Gone are the days when they used to think about repaying the home loans as a burden. Today’s youngsters consider it an absolute necessity to own the place that they live in. Many even book the flats before they get their first salary in their hands.
Coming back to the home loan scenario, where the builders too play an important role. They offer popular schemes like 10:80:10 or 80:20 with the special tie ups with banks. In such schemes, developer is bearing the interest for under construction period. Rate / sq. ft is slightly higher in 80:20 schemes. In this scheme, the buyer has to pay 10% or 20% of the entire cost of flat in the beginning and he can pay the balance amount at the time of possession.
In low cost housing (less than 20 lacs), bankers are giving LTV as high as 25%. (LTV – Loan to value ratio).Similarly there is one more concept that needs to be understood in depth. That is the Pro rata funding. Bankers are doing their bit by helping the client in assuring about his cash flow during under construction period. The banker and the buyer, both contribute equal percentage of the flat cost, thus giving buyer some breathing time to raise his own contribution funds.
Let me throw some light on the middle aged investors too. I.e. people who are at a stable and growing career, age group between 48 to 52 years old. They are more interested in an affordable housing where the earlier loan has been closed and they are looking for a loan for investment or income tax purpose.
For a layman, it is quite confusing to analyze what is best for him. Hence you need an expert to sort it out. The percentage of ignorant and disoriented people is very high in the market of home loans. By the time they realize that they have been paying a heavy and somewhat miscalculated EMI, they have already missed the bus.
These are the people who keep on shifting their loans from one institution to another. Unless they are properly guided, they end up paying lacs of rupees more than required. I firmly believe in transparency and make sure each one of my clients is fully aware of his liability towards a particular bank or financial institution.
All said and done, there is nothing more rewarding than buying your own home and living in it. My advice to new investors would be, keep your eyes and ears open and grab the best deal possible. Happy investing!
Points to ponder:
- Take time to finalize your dream home. Decide on a budget, the area etc.
- Be very clear about your repaying capacity. Your home loan expert should be able to guide you through the procedure once he understands your needs.
- Let the home loan counselor explain you in detail about the type of rate of interesti.e. fixed or floating.
- Trust in the financial institution also brings about a positive outlook to your home loan.
- Discuss about things like LTV, pro rata funding etc which seem like alien terms to you. Once you understand these concepts, it will be simpler for you to take the final decision.
- Keep yourself updated with the current market rates and be well informed. After all, your money should gain you returns in a multitude
The writer is a home loan expert and is the CEO of Easy Financial Solutions. He can be reached at email@example.com