The years 2011 saw a slowdown in the growth of the real estate sector. The crisis in the property sector reached its pinnacle in 2013 where all sectors across India experienced a record slowdown in sales and high build-up of inventories. Numerous litigations against various builders, slow economy and high interest rates overshadowed the sales and promotions of new properties.
But 2014 saw the recovery of a sector which had become stagnated throughout the previous year. This does not mean that the value of property had depreciated. On the contrary, it’s appreciated, despite the high inventory build-up. But buyers were few. But in 2014, the RBI guidelines allowed a relaxation in the interest rates. The formation of a stable government at the centre boosted investor confidence and buyer sentiments.
The real estate sector has seen its revival this year. The financial year will close in a record number of sales when compared with the previous 2 to 3 years. The revival of the real estate industry has also boosted the increase in home loan sanctioning. Banks, web portals are all abuzz with home loan activities.
So what has been learnt in the past few years about house purchases and home loans? In a nutshell, we need to gain more knowledge about home loans and interest rates before applying.
“Offers” and “benefits” do not last in the long run and a person looking for a home loan must know all about his/her eligibility and financial capabilities before choosing a plan. Here are five tips that can help reduce the risks involved in choosing a home loan:
- Investing in property investment is not an ideal solution for short term profits. The last few years have clearly shown that projects-which were to be finished in 2011/12/13-were delayed even further. Those who had planned to sell off their properties took a long time to find the right buyers. The real estate industry clearly suffers from a spasmodic change in demand once in a while. Hence, if one plans to invest in property for profits, he/she should eye the long term goals.
- There are numerous portals available for home loans online comparison. Such portals not only allow a user to compare loan plans from different financial institutions, but they also offer some insight into a user’s ability to pay back the loan. However, there are only a few amongst those which offer a comprehensive insight of all perspectives related to the home loan. In this day and age, use of these portals can provide leverage in home loan acquisition.
- A buyer should not opt for a floating rate unless there is a financial cushion to absorb the changes in the market. Many users who opted for floating interest rates on their home loans earlier found their EMI amounts increased considerably during the last few years. Overall benefits to be acquired by floating rates, thus were lost. It is advisable to assess a future budget before choosing a loan amount.
- Price correction is not always a possibility. Many builders and sellers learnt it the hard way in the past couple of years. When prices dipped, a number of sellers assumed they would rise along with the market. Surprisingly, they did not in many pockets and builders suffered losses. Hence it is important to choose the right property.
- Lastly-and importantly- the right kind of builders should be chosen. One should not settle for home loans online comparison just after selecting a house. Always find out more about the builder or a property in question. It is safe not to invest in a project under litigation. Hiranandani is a prime example.
The last few years established that the property business too is subject to market risks. It is a hen that lays golden eggs; albeit tiny ones. For huge profits, ‘eggs’ have to be collected over the years.