Are Home Loan Making Houses More Affordable In India?

India has one of the fastest growing and most promising real estate markets in south-east Asia. Increasing demands for affordable yet high-quality housing has created a massive boom in real estate. Moreover, stagnant prices and growth in average income have made housing affordable for a new class of young professionals.

The availability of affordable home loans has also made housing significantly more accessible for the emerging LIG and MIG section of the population. Recent reports by a real estate consultancy firm show that favorable home loan rates in India have considerably increased the number of people who own their private accommodation.

In the 7 key cities including Kolkata, Mumbai, Delhi NCR, Chennai, Pune, Bengaluru, and Hyderabad, residential properties became much more affordable between 2011 and 2018. Mumbai came up as the least accessible area in 2018; however, it saw a dramatic improvement in affordability during these seven years.

Availability of housing loan with borrower-friendly terms and growth in income has made housing much more affordable in India. The number of availed housing credit grew by 39% between 2017 and 2018, offering more funds to the lower and middle-income group of the community. The average disposable income also increased by almost 9%, which improved the repayment capability and creditworthiness of prospective borrowers.

Home Loans Making Residential Properties More Affordable:

There are several ways of how home loans contribute to making residential properties more affordable. Affordable home loan rates in India make it significantly easier for eligible applicants to acquire funds to purchase properties of their liking. Let’s take a look at some of the features that make it easier for different income groups to secure properties across the country.

Large Loan Amount: 

The recent growth in disposable income allows lenders to disburse offers on secured credits like home loans, unsecured advances like personal loans and business loans, and a host of other financial products more considerable loan amounts to prospective borrowers. Eligible candidates can get advances of up to Rs. 3.5 Crore as a home loan from companies like Bajaj Finserv.

Most of these companies also offer the facility to avail of top-up loans on top of the original credit. Lenders can provide up to 50% of the sanctioned loan amount as top-up loans to eligible candidates. Such loans usually come with a minimum additional interest rate, and a borrower can use an online home loan EMI calculator to determine their total monthly installments and affordability.

Government-Backed Schemes:

Various Government-backed plans provide sizeable subsidy to both the first time and existing homeowners, which makes housing more affordable among individuals. For example, Pradhan Mantri Awas Yojna subsidizes home loan interest rate to only 6.93%, which can save up to Rs. 2.67 Lakh in interest over the loan tenor. Low home loan rates in India are a major contributing factor for more people availing such credits.

Choice Of Property:

A relatively lenient real estate market allows an increasing number of financial institutions to offer a large selection of properties to an individual. Lenders offer their customers complimentary property dossier, a customized report containing choice real estates and guide to navigate through the legal and financial aspects of purchasing properties. It also helps them gain home loan interest tax benefit, which further helps them save a significant amount during repayment.

Experts predict that the real estate market in India will continue to grow at a steady 3% to 5% rate for the next few years. With the recent repo rate cut by the Reserve Bank of India, home loan rates are predicted to become even lower and boost the affordability for buyers.

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