A house loan or home loan means an amount of money that is lent to buy a house from a financial institution or bank. Home loans consist of an interest rate and terms of payment that are flexible or fixed.
Individuals typically take a home loan to either purchase a house/flat or a plot of land to create a house or to renovate, expand and restore the current house.
The property is mortgaged as a security till the debt is repaid to the lender. The bank or financial company will keep the land title or deed until the loan has been settled with the interest owing.
Due to the pandemic’s impact, the housing loan market saw a drastic fall in its sales during the lockdown period. However, the situation is turning coat and showing promising signs of a rise in sales. Thereby, we can see that a home loan can turnout to be a useful thing.
The market shows signs of hope
Real estate sales demonstrated modest change during the July-September period after having endured a dismal April-June period due to the Covid-19 pandemic. During Q2 of FY21, housing sales across seven major cities in the country dropped 35 percent YoY to 50,983 units, according to a market study. However, sales rose by 104 % sequentially from 24,936 units in the quarter of April-June (Q1FY21).
In seven cities-Delhi-NCR, Mumbai Metropolitan Area, Chennai, Kolkata, Bengaluru, Hyderabad and Pune, sales were 78,472 units in the year-ago season. In the future, based on additional discounts and reduced Home Loan Interest Rates, outsourcing businesses foresee a more robust turnaround during the holiday season.
As several projects were launched in the last quarter, the Indian real estate market is seeing some recovery. With numerous schemes and deals, developers were able to clear actual inventory. The study forecast this turnaround to proceed with more discounts, incentives and competitive payment systems to lure clients as we head into the holiday season.
The sales of residential units recovered to 50% of pre-Covid levels during the July-September period. This is primarily motivated by relatively low investment costs, upfront discounts, and stamp duty fee regulatory relief. The appetite for investment has yet to rebound, and younger consumers primarily power city-centric revenues, the study said. Office absorption levels are estimated to be 30 % of the pre-Covid-19 levels in commercial space.
- 104 percent quarter-on-quarter rise in home sales
- Between July and September, 50,983 units were sold
- Office absorption is at 30 percent of the pre-Covid rate
The government has launched different home loan subsidy schemes like PMAY to promote the availability of housing loans. The Home Loan Subsidy Scheme is a Credit Related Subsidy Scheme in which beneficiaries can apply for a loan and obtain an interest subsidy on their home loan. Depending on the borrower’s income group, the interest subsidy varies from ₹ 2.30 Lakh to ₹ 2.67 Lakh. RBI has recently connected home loan interest rates to the repo rate. Thus, in the last few monetary policies, the repo rate has been continuously lowered to ensure easy loans are readily available.
Some typical home loan characteristics and benefits are described as follows, making it a go-to choice for fulfilling housing dreams:
- Multi-Purpose: Housing loans are multi-purpose loans used for the purchase of a new residential flat or building, the construction of a new house on a plot, the reconstruction of your home or the expansion of your existing house.
- Long tenure: Because the size of the debt included with housing loans is large, it can take up 30 years to repay it. This makes it easier to pick an inexpensive EMI and to ensure that there is no burden on his monthly budgets.
- High Financing: Banks lend 75 to 90 percent of the selling value of the house as a home loan. At the point of getting the housing loan, the remaining balance to be paid by you as a down payment.
- Prepayment and Foreclosure: These loans have a foreclosure or prepayment service where holders with house loans can pay more than the EMI or prepay the loan. This makes home loans a friendly commodity for consumers. The banks and NBFCs do not charge any fee or interest for the prepayment or foreclosure of a home loan, as per the Reserve Bank of India.
Banks with lowest Home Loan Interest Rate
|Bank Name||Rate of Interest||Lowest EMI/Lakh|
|Citibank Home Loan||6.75%||₹ 691|
|Bank of Baroda||6.85%||₹ 655|
|Central Bank of India||6.85%||₹ 655|
|HDFC Home Loan||6.90%||₹ 659|
|ICICI Bank||6.90%||₹ 659|
Conclusion: These new measures taken by the apex bank and the central government hope to see a rise in the sale of home loans in the upcoming festive season. Different market studies are corroborating this optimism with data and survey reports. Apply for a housing loan and take benefit of the festive season and avail best interest rates.