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07 March 2011

Appreciation in Value of Home and Home Loans

This term is used to assess the total value of the property in consideration. If the borrower has to mortgae his property to take  a new home loan then an appraiser of the property comes and assesses the total market value of the house. This is done considering the area per square feet in that area, the total area of the house, the property rates in that area and availability of houses in thht particular area.
When the rates of homes increase and we say that the borrower of the loan had purchased the home at say 20 lakh rupees. After few years due to increase in property rates the same house will cost for 50 to 60 lakhs. This is called appreciation in value of homes.
Appreciation is taking place at a veyr fast rate and houses are soon becoming unaffordable. Many have to opt for purchase in the suburbs or outskirts of the city as rates of houses are shooting up at a very quick pace.
Selecting area is also important if one thinks of investment purposes for the buying of property. There are some areas which appreciate in value much faster than the others. Places near the railway station, sea sides and also the hub where public is more and have easy access to the destination really appreciate much faster. Where as places far from the city and on the outskirts with less facilities and commuting services may take loanger to appreciate or even remain with stagnant prices. It is also possible that some area may suddenly appreciate in value when government proposes redevelopment plans like railway station, airport or a flyover so the same property which was available for less will become unaffordable after  a few years.
Selecting a home and applying for a home loan it helps to take an estimate of the appreciation of that area in the past few years. This will give you an idea about the rate of appreciation in that particular area.

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