How should you plan buying your dream house amidst current expensive loans?
Some big banks have again increased the interest rates on home loans. Clear indications are being received from RBI’s monetary review that it is difficult for loans to become cheaper for the next one year. In such a situation, how should you plan buying a house?
RBI has not made any changes in interest rates for the third consecutive time in its monetary policy review in August. But concerns have increased on the inflation front.The central bank has raised its inflation estimate for the September quarter by one percent to 6.2 percent. At the same time, indications have been given that there is no hope of loans becoming cheaper for the next one year.
Many people are waiting for loans to become cheaper so that their dream of buying a house can be fulfilled. On the other hand, many big banks have again increased the interest rates on home loans. Along with this, after the Coronavirus pandemic, property prices have increased rapidly in Delhi-NCR.
According to a report of CREDAI, property prices have increased by 16 percent in the first quarter of 2023 as compared to same period last year. Banks give up to 90 percent of the property price as loan for buying a house.
To avoid the heavy burden of home loan EMI, Rahul should arrange as much money as possible for down payment.For this, he can use low return investments like FD, RD, debt fund.
Rahul will get low return on such investment options than home loan interest. So, it is not wise to take more loan at such high interest rates especially when you are sitting with cash at home!
Personal finance expert Jitendra Solanki says that the cost of property has increased rapidly in the last one year. Home loan rates are also close to double digits. There are chances of further increase in the rates.
Experts say that planning to buy a house should be done thoughtfully. It would be better to arrange as much money as possible for down payment before finalizing the deal. Keep the home loan payback amount as low as possible. This will also reduce the amount of EMI. You can use your savings for down payment. If you have made a long-term investment for your retirement etc., then, you should not break it.
Jitendra Solanki says that the inflation of essential items is increasing steadily. In such a situation, the amount of EMI of home, car and other loans should not be more than 40 percent of your monthly income. If your EMI is higher than this limit, the risk of making default will increase. This can lead to financial crisis in future.