What Is Home Affordability? Check How It is Increased In Pandemic
Having a home of our dream is everyone’s desire, but practically it is difficult to get a home within a confined budget. Especially if you are living in Urban City’s like Mumbai or Navi Mumbai, it is next to impossible. So, most of the urban population opt for home loans and get the home of their dream. But while getting home loans there are many factors that you have to look after and one of those most important factors is a home loan. Home affordability means how much you can spend on your home and how much home loan you can afford without compromising on your daily needs. Many studies and research have done on this topic and many people say that one should not opt for a home loan more than 28 % of their income.
Middle-class people always need to juggle between their daily needs and liabilities like home loans, car loans, etc. Especially families in India always live in a fear of choosing between paying for a roof or paying for food, medicines, clothing, and other stuff for their kids and other family members. Home loan affordability changes from person to person as the home is a long-term investment and everyone sets their own priorities. It is not strange to see people spending more than 50% of their income on their home loan EMI.
How Home Affordability is Increased In Pandemic?
If you consider this pandemic situation then we could say people can afford a costlier home within their confined budget because of the dramatic reduction of home loan interest rates. For example, if someone is opting for a home loan of 50 Lacs for the tenure of 20 years then his/her EMI will be Rs. 37, 870 with the present interest rate of 6.7%. Whereas if it would have been a normal situation he/she would be paying more than 8 % interest rates and her/his EMI would be Rs. 41,822 at just 8% interest rates.
From the above example, we could see if the borrower can pay more EMI than Rs.37,850 then he/she will opt for the home loan of more than 50 lacs. Which means they can afford more home loan than before as their monthly EMI has reduced because of the decrease in home loan interest rates in the present pandemic situation.
So, with the increase in affordability, the home loan borrower now can buy a bigger property with the current income.
However, According to the survey, there are other factors also which are responsible for the increase in the affordability of homes. Few of them are as per the following
- Attractive Housing Deals offered by developers were the top factor driving housing demand.
- Availability of cheaper home loans by the public sector banks was the second factor in their property purchase
- Reduction in Stamp Duty Registration Charges against property
Home Loans at top banks are available at rock bottom interest rates. Check the present home loan rates in the bank (Last Updated 10 Mar 2021):
|Bank||Home Loan Rate||Processing Fee||EMI Per Lakh|
|HDFC||6.70%||0.50%, Min ₹ 3,000, Max ₹ 10,000||₹ 645|
Besides all the above factors, it is not hidden that real estate is an evergreen field for investment and no time is bad to buy your very own property. And the best time to buy property is Today!
Also, Check – Home Loan Disbursement – A Step By Step Guide