We list the factors that determine when it might be the right time to buy a house.
Does it always feel like every time you decide to buy a house, the universe conspires against you to make the dream that much more difficult to achieve? While you battle high realty rates, affordable houses that are otherwise not appealing, and lack of finances, consider these 5 factors that can help you decide if you should buy now or later
* When interest rates reduce.Home loan interest rates were reduced after demonetisation was announced in November 2016. Since then, home loan interest rates have ranged between 8.5% to 10% across banks and financial institutions in India. While there are murmurs of rates dropping further, it cannot be denied that this cut has resulted in the lowest interest rates in the last four years. If you have definite news that rates are set to reduce further, you can wait to apply for a loan; else, the time is now.
* When there are home loan offers. The festive season often brings with it several home loan offers from housing finance companies. These offers help you save money over the long run. For instance, you might be offered a lower rate of interest. Or the company might waive off processing charges. Or the company might offer a loan transfer with nominal processing fees. Whatever the offer, if you think it will save an appreciable amount of money for you then you should opt for it. When considering an offer, use a housing loan EMI calculator to find out the monthly EMI payable, and whether it can be reduced with a longer tenure.
* When you have savings stashed away to make a down payment. Most first time home buyers (wrongly) assume that they can pay for the house and all other associated costs from the loan they get. However, the loan amount is normally not over 80% of the house’s cost. This means that the remaining money must come from your savings and returns from investment. If you have built a sizeable savings fund over the years, then you can assess if it is enough to make a down payment and also have some money left over for incidentals.
* When you have no other liabilities. Often, most home loan applications are rejected if the applicant is already servicing too many loans. Several liabilities competing for your income can result in you having less money to repay the loan. If the housing finance company does approve your loan request, you may be charged a higher rate of interest. Overall, applying at this time becomes a costly proposition, so wait till you have little or no liabilities. This will also result in an improved credit score, which will help your home loan application.
* When you have lived on rent for years.Living in rental accommodation can put a temporary roof over your head, but it can also drain your resources. None of the money you pay towards monthly rent and bills is ever returned to you. Nor does your occupancy of the house give you ownership rights. Instead, if you take a home loan you can repay it via monthly EMIs and move into the house immediately.
Is the time right for you to buy a house? Be sure to consider the parameters listed above and team up with a good housing finance company for your loan.