Banks are pursuing potential borrowers with their teaser interest rates and exclusive offers. The real estate scenario today is experiencing development of new projects all over the country and builders are engaged in pushing their completed projects at good prices.
BORROWING CORRECT AMOUNT
In the current economic scenario, most of the people who are buying homes are young, salaried IT employees, professionals, entrepreneurs and self-employed businessmen. Real estate has always been considered as lucrative and prudent investment option. The present generation has bought down the age of purchasing homes. The average age now is 28 -34.It is not like 20 years ago when most of the home buyers belonged to the age group of late 40s, who used all their savings to purchase a property. Today, the times have changed, the young generation is well traveled and more dynamic , and they are also being helped by the different financial institutions that have made home loans a far easier process than in the olden days.
The important thing to remember for taking a loan is not to extend the finances beyond a certain limit . The real estate market has product for every pocket i.e from economic affordable housing to ultra luxurious lifestyle condominiums and bungalows. The thing to remember is A bigger amount of home loan means that the borrower will have to pay higher amount as EMIs.
The banks are ready to give home loans of about 50% to 55% of the borrower total monthly take home salary after doing their own due diligence of the clients credit worthiness. Individuals of today are intelligent enough to understand their monthly expenses of their household. Market experience shows that not more than 30% -35% of your monthly income ( whether individual or combined) should form part of your EMI. As you move along in life various other needs keep cropping up like education and upbringing of children , medical expenses etc plus the inflation factor is always there.
STAY AWAY FROM DEBT CON
One needs to keep in mind also that when interest rates increase, the home loan borrowers who have opted for loan have to pay increase EMI installments. If one has not been prudent enough while taking a loan and has taken a bigger amount of loan then in some cases one has to make drastic changes in their day-to-day life and can even have to do away with their current lifestyle, luxuries, periodic investments and saving for emergencies. As mentioned above The amount given by the banks or the financial institutions as home loan results in an EMI and if EMI becomes more than 40 % of the borrower’s total monthly take home salary. The thumb rule suggests that it becomes hard for the home loan borrower to pay back to the financial institution. When borrowers are not able to pay back their EMIs, they end up taking some more loans to repay their previous loan. This taking of more loan to repay the previous loans is not advisale as it might drag a borrower into a vicious circle of debt trap
So the mantra which really everybody of today generation knows is to borrow right and tight. In today’s market scenario there are home options for every pocket.
And yes do remember “OLD is GOLD”, so do not hesitate to take advice of your elders and well wishers,. You will not loose anything, on the contrary will only gain from their experience.
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