RBI's base cut & Home Loan?

With RBI announcing a substantial 50 basis point cut in the policy rate many of home loan customers would have rejoiced. But it will be too early to celebrate, as most of the prominent banks in India have decided to pass on the gains of this cut to its home loan customers a little later. The financial institutions have decided against sharing the benefits of this cut with its customers, because the deposit rate remains soaring high and even after having high interest rates the banks have not been able to summon the desired funds through the means of deposits. When the borrowing rate is this high, it will hurt banks margin if they cut on lending rates. Hence at such times Credit Favor has issued a few guidelines for users looking for home Credit Favor. One should weigh all options before applying for a property loan from any particular bank. Credit Favor helps its users by running a number of tests before narrowing down to a particular option.

BAGGING A BARGAIN

While the property should be of your choice depending on the necessities and amenities it offers what you must pay attention to is which builder offers possession at the earliest. As if the possession will take time you will be burdened with the instalments else you can put property on rent which will satisfy the instalments. Although the experts have an opinion that in current scenario the purchase of property should be made for the purpose of end use and not to rent.


LEND THE LEAST AMOUNT

Deposit the maximum down payment which is possible. As this will substantially reduce the total loan amount you need to withdraw, hence in turn lowering the interest burden. For this if you even have to break an investment which is paying you around 9% interest, do that. As it isn't quite feasible to invest at 9% and borrow money at more than 10%.


GO FLOAT

At this particular time the rates of real estate loan are as high as 10.5% which are quite high and are not supposed to grow any more. The worst can be that the rate can remain fixed for a very long time, but still you won't have to worry as it will still be less than the fixed rate you will go for. But, if the rates fall only you will be benefitted with that.


LESSER THE BETTER

Don't essentially go for the maximum tenured loan as you might be able to repay before the term ends. This long tenure will be a liability if you decide to pay it before the tenure ends, as longer the tenure more will be the pre payment penalty.


HOW TO PREPAY

This is the question which basically haunts fixed a salaried person. As with a fixed income source he can manage a monthly instalment but prepayment seems out of question. An alternative which can be considered is combining the family income and increase the EMI.

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