Hyderabad: The Reserve Bank of India (RBI) did not raise the key interest rate in recent weeks. While this has brought some relief to borrowers, uncertainty still continues about how long this relief will last. Borrowers face challenges when loans are expensive. Their loan eligibility will decrease and, as a result, the size of the house purchased may be affected. Should you take a home loan in the current situation? Or wait a little longer?
Annual retail inflation eased to 5.66 per cent in March. It touched a 15-month low compared to 6.44 per cent in the previous month. RBI will continue to monitor this. Corrective action in interest rates may be taken in the upcoming monetary policy review. So, if you are already planning to buy a home, keep in mind that interest rates fluctuate. Home loans are usually on a floating interest basis. These change whenever the repo rate changes. So, prepare to get a home loan without thinking about the interest rates.
With a little planning ahead, the dream of becoming a homeowner can come true. It is important whether you are financially stable or not. A home loan lasts for a long time. So, make sure that there is no problem with monthly payments. The loan is usually available up to 75-80 per cent of the value of the house. There are other expenses like stamp duty and registration. You have to bear at least 30-40 per cent of the property value. The decision to own a house should be postponed until a better financial condition is reached.
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Banks are now linking loan interest rates to credit scores. If you have a good credit score, you will get an interest concession. This will save you money in the long run. If your credit score is poor, you will have to pay a higher interest rate. This will make your loan more expensive. If the score is more than 750 points, loans are easily available. Before applying for a loan, try to find out whether your credit score is in good standing or not.
Interest rates are currently high. If inflation remains at the RBI's tolerance level for a longer period of time, interest rates may be cut. If you decide to buy a house, there is no need to wait for interest rates to drop. You will borrow on a floating interest basis. So, whenever the repo rate goes down, the interest on the home loan linked to it goes down. So, there will be no problem.
If you have a fixed income and a low debt-to-income ratio, the chances of getting a loan at subsidized interest are high. You can try to take a loan from a bank where you have maintained an account for a long time. All your financial details are with them. So, it helps a lot while taking a loan. It is advisable to take a home loan when you think that you will pay the instalments continuously for 10-20 years without any problems as planned. There is no point in waiting to buy a house as real estate prices are increasing from time to time.
