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29 June 2011

Buying a Home on Loan- Is This a Joke?

Is this a joke? is it really possible to take a home loan and repay this amount in the given schedule by the lending institutions?
With so much competition amongst builders and loan lenders the customer and buyer of the home has a variety of offers to choose from. Right from lavish villas to homes of 2 or 3 BHK are available along with latest amenities and facilities. There is also lot of hum dum about budget homes and redevelopment plans of various societies are nowadays in news. Is this all the real picture?
Personally when trying to search for an investment property or a second home, I really found it very difficult to narrow down on any option. Though from the outside there are so many options and homes available in all budgets, true picture is there aren't any homes for many to buy. Whenever you narrow down on any cheap property either it is illegal or the builder has bad reputation of not completing projects on time, here you can expect a much lower rate and negotiations also but in the end there is doubt whether you will get the promised home and that too on time!
Why? they are very costly! are there really any budget homes , I doubt . With so much mention on this sector having homes at affordable rates, where are the affordable rates? No wonder people are following the wait and watch attitude, we really don’t have any choice.
People who wished to purchase new flats have waited and waited, patiently for some prices to drop but I don't think there is going to be any change in the market. What the finance gurus had predicted and people had expected has not come upon, and the prices are rising at  a steady rate. Many of the buyers have waited for prices to stabilize or drop , but there seems no way for such a thing to happen.
Even the farthest property rates have come to 4,000 or 5,000 per square foot. After calculating area of the simple flats this comes to minimum of 45 to 50 lakh rupees. Lowest among them being 25 to 30 lakh rupees. Buying a one bedroom flat of 425 or 500 square feet has now become the minimum requirement of any home buyer and there still aren't many choices in this sector. Consider an example Mr X. earning 15,000 Rs. per month. What will the person take loan and how will he repay it?
Arranging for the down payment will be another hurdle as this sector will not be able to save that much for the down payment also. Suppose both spouses are working then it will come to 25 or 30,000, or maybe there are other siblings who also wish to combine the amount and purchase then there is a possibility of buying a 1 BHK house. Selecting the right place will matter if you have a low budget for buying a home. Some areas have low area per square foot rate and here the homes may just about be affordable if the borrower is eligible for taking a loan. Paper work and documents also must be in place.
With builders pouring flats with latest amenities and all facilities the buyer will definitely wish to avail all these facilities, but at  a lower price. Even after making both ends meet the family satisfaction level also has gone down when they purchase a smaller flat. The borrower is tied down with the pressure to buy a bigger house whether they need it or not. Resale flats are going on if the buyer gets a lower price deal on the home. Otherwise the home sector is stagnant for some time with lower sales every year.
Got the clear picture that a borrower needs to earn 1 lakh Rs or more per month to afford a home loan. A down payment of 8 to 10 lakh rupees and then paying a heavy interest on the loan makes the total cost of the property you buy very high. And that too after owning the flat on loan the interest paid will not be reimbursed when you go about selling the flat, since this procedure will go considering the area per square feet in your location and the high interest amount will not be considered unless of course the rates shoot up very high and against the proportionate trend then you will benefit from taking a loan and buying a home.
Be realistic. The budget homes making lots of noise have disappeared. The nano homes in budget range really gave hopes to many.  Having flats in range of 4 to 7 lakhs, wonder what happened to the nano homes? All working project shows villas and bigger homes.
The need of the hour is to have budget homes. Be it for investment purposes or for staying. Also I think many of the amenities are that which we can do without. Hence the early phase of buyers was lured with these facts but now the buying of a home has become an informed decision. Guys you need to really lower the rates, people understand only money and when they get more than they pay for, there will be movement in the graph. Government needs to accommodate and allow concessions to builders so that they are encouraged to build budget homes, and kick start the selling’s!

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