Is it a good time for a home loan?

Granted the Coronavirus pandemic and consequent nationwide lockdown has most of us stuck indoors and any big purchases may have been temporarily shelved. But the silver lining is the gift of time. Now is the time to complete that homework and find everything you need to know before making one of the biggest investments of your life - a new home.

For the last few months, experts have suggested that the period after the lockdown is going to be quite beneficial for those planning to buy a home. This is mainly because developers and construction companies will want to make up for the time lost and recover their losses. So prices of real estate are most likely to go down. They won't have a drastic fall, but there is likely to be a significant decrease. Even if, for a short time. So, yes, if you are considering buying a home, now might just be a good time. Which brings us to the next order of business. Is now a good time for a home loan?

Real estate purchases are a serious business. So if you are planning on acquiring a loan to buy a new home, you need to consider your current income and your future potential earnings. You also need to assess any other financial assets like investments in stocks or mutual funds. They might act as a surplus to your current income and can be liquidated to serve as down payment or even as a fail safe to pay your EMIs in case of job instability.

You must also remember that banks are likely to be a lot more stringent in their screening process when prospective home buyers apply for a home loan. The degree of job instability due to the pandemic is likely to result in increased loan defaults and bad debts, something that financial institutions will not be able to afford, especially because of the already lowered rates of home loan interest. Some financial institutions are already asking home loan applicants for details of pay cuts and job stability while filling out the home loan application to understand whether the applicant is financially sound and in a position to repay the loan. So if you are considering purchasing a home using a home loan, you need to have a foolproof home loan application.

What if you already have a home loan? If you have already purchased a home and have availed of a home loan, you’re likely to be contacted by other banks and financial institutions offering home loan balance transfer schemes under which you can switch your loan account to another institution for a lower rate of interest. Following a guideline from the Reserve Bank of India, the repo rate was cut bringing home loan interest rates to a record low. So if you are considering switching the balance of your home loan amount to another financial institution, now would be a good time. Find out how Finwisely can help. Additionally, if you have opted for a repo rate-linked loan, you can expect your EMIs to reduce fairly quickly.

Before we wind up, here are some points to remember before you apply for a home loan.

Do your homework Thoroughly compare interest rates between home loans, home loan schemes etc before you take the plunge.

Calculate your EMI A number of financial information websites offer free home loan EMI calculators that can tell you much money you will be expected to return with interest during the duration of your loan. Check out the Finwisely EMI calculator right here.

Ask questions Financial institutes generally offer relationship managers who can answer any and all types of questions that you might have with reference to your home loan. Finwisely does that too. Click here to get in touch.

Balance transfers are not as cumbersome as you’d believe Contrary to popular belief, transferring your home loan account to another financial institution is pretty straightforward. Have questions about balance transfers? Ask Finwisely.

Want to know more about the home loan process? Get in touch with Finwisely to get your first consultation. No charge!

What can Finwisely do for you? From helping you compare and understand your options and recommending financial institutions that will best suit your needs to walking you through the home loan process, Finwisely can play an important role in your home buying decision. Finwisely is an end to end solution that understands your financial needs and gives you the personalised attention you deserve.