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Successfully Negotiating a Deal

Posted on by HomeCapital Team

If you are a home buyer, you have a huge scope for sucessfully negotiating a home deal today. This is because the developers are experiencing a liquidity crunch. They are accommodating customers with more discounts and attractive offers.

Before starting a successful negotiation, it is advisable that you should do a background check of the developer. If the developer has enough number of buyers for his new project, then you can negotiate but up to a certain limit. The final discount, which you get might not be up to your expectations.

In order to successfully negotiate with the developers, you need to follow some really useful tips that will enhance your negotiation skills. First of all, in order to be a good negotiator, you need to do a thorough research of the market. Having adequate knowledge of the local market will help you in negotiating a home deal with developer smartly. If you wish to successfully strike a deal, you need to have a complete idea of the prices of similar properties in the area. You can check the property prices of your preferred area through online property portals such as MagicBricks.com, Housing.com and CommonFloor.com among other portals.

The second tip that you need to follow in order to be a good negotiator is to understand the price trends. Understanding the price trends of the prevailing locality will help you get a realistic picture of how much discount you can get. You should do a comparison of the current price of the property and the property’s price during launch. You can also contact local brokers as they will help you in understanding how the property prices have moved in the market and give you an idea about how much discount you can get. Any individual who has purchased a house in the same project/location will guide you on how much the property’s value has appreciated and how much discount you can expect. An important point to note is that you should be extremely careful in case of properties that are offering heavy discounts.

After understanding the prevailing market conditions and price trends you should place your offer. You should contact the developers of all the properties you are interested in and ask for a quote. You should let them know that you are a serious buyer and want to buy a home at the earliest. Let them know that you are looking for the best possible deals and discounts and are exploring all possible options with different builders. Once you have the quote, make an offer supportive of your market and price research.

You should be a buyer who is cash-ready. If you are a serious buyer who is ready to make an ‘Advance Payment’ or pay the ‘Application Fee’, you can strike a good deal. This is because sometimes developers offer irresistible deals for serious buyers. You should keep your cheque book and/or pre-approved home loan documents ready in such a situation, as you will not be able to get the same deal again.

In order to be a good negotiator, you need to need to adopt a rational and practical approach while dealing with the developers. You should understand that the developers might not lower prices below certain levels due to the costs involved and their own expectations of margins. Developers will also be mindful of their code of ethics as they do not want to give an impression that some customers are paying more and some are paying less.

Approaching reputed and RERA compliant brokers/agents could be helpful for you in getting a good deal as these professionals are experienced and they have good knowledge and strong network when it comes to real estate.

Lastly, you must perform a SWOT analysis wherein you must analyse the Strength, Weakness, Opportunities and Threats associated with any property. Such an analysis will help you in making your buying decision and enhance your negotiation skills especially while negotiating for the price.

How apartment living can improve your work-life balance

Posted on by HomeCapital Team

Most corporate companies as well as other small and medium businesses have switched to work from home culture since the pandemic grabbed a firm global grip. Now, it has become the norm. You may be spending more hours working since you are working from home. Hence, maintaining a work-life balance might be a challenge for you. Apartment living is a perfect solution for this challenge.

You may be having a proper schedule before this work from home mode which includes working, using the gymnasium, having timely meals, social hangouts, etc. But now suddenly, these things are missing and you see a disrupted work-life balance and also low productivity at work. So let us see what apartment living has to offer for you.

Residential complex apartments are designed and built to give you a complete lifestyle experience. It mainly includes a leisure center, recreation arena, co-working spaces, and social spaces, open spaces and mini-parks, in-premise grocery stores, and many more such amenities.

1. Leisure centre and recreation arena

Leisure centre

A daily workout or exercise, may it be at the gymnasium or at the yoga center is essential for body and mind. Alternatively, a rejuvenating swim after work is true bliss. You may be thinking about where these things can be done in the current lockdown situation. Well! Right here in this apartment complex, you will be able to use a gym for a workout, a yoga center to meditate as well as to relax, and also a jogging track for a quick run.

Recreation arena

Apartment complexes have mini theatres with a capacity of around 15 people. Some also have a sports area which includes table tennis, basketball, and volleyball, etc. Some developers design a lush green meadow spread on the rooftop. This makes an ideal place to enjoy the sun.

2. Co-working spaces and social spaces

Co-working spaces

Developers have been relentless in making a thorough facilitative experience for their buyers. You can now avail a co-working space in your complex premises. You can start working there to break the prolonged monotony of working from home. This co-working is WIFI enabled, comprises tea/coffee dispensers, has several kiosks or workstations, etc. thus giving you the look and feel of an office. 

Social spaces

Residential apartment complexes also have social spaces or communal spaces where you can spend time socially meeting your neighbors and other fellow members of the complex. Some apartments also have clubhouses with pool/snooker/billiard tables, carrom/chess, table tennis, playing cards tables, etc. You can have a relaxing weekend over here.  

3. Open Spaces and Mini Parks

Open spaces

Urban areas have less access to nature or we have to travel some distance that is a long-lived reality, but not anymore.  Developers are providing dedicated open spaces with lush green walkways, plantations, and beautiful landscaping. Fresh air is also important for a healthy mind and body. You can get the feel of mother nature amongst trees, plants, and fresh green meadows in these apartment complexes.

Mini parks

Nowadays, modern apartment living also has mini-parks with small lawn areas and children’s play areas. You can spend a really fun time with your little ones or just choose to rest for a while in this mini-park.

4. In premise grocery stores

Usually, residential apartment complexes have some commercial areas which are dedicated to shops like grocery stores, salons, stationery suppliers, etc. Eventually, you will have all your daily essentials on your premises. This saves your hassle to check other shops in your vicinity.

5. Maintenance on call

Just imagine that you are working from home and having a demanding day. Suddenly, your bathroom tap starts leaking due to some washer issue or a short circuit or an appliance failure, or any other household issue, what would be your action? You will have to stop working and immediately find someone to fix the issue. This issue is resolved at your fingertips when living in an apartment. The apartment complex has an on-call maintenance team to address and resolve all household repairs which we generally come across.


In the current pandemic times, work from home culture has been a high-pressure experience for many, posing a serious challenge in maintaining a work-life balance. An imbalance in work-life takes a toll on the mind as well as the body. However, apartment living is like a one-stop solution addressing each facet of your life in detail and making it available at ease. Your schedule and lifestyle are very well taken care of over here. So, it will indeed be a wise decision to choose living in an apartment.

Which Mumbai real estate locations still deliver good ROI?

Posted on by HomeCapital Team

Mumbai’s real estate market offers a range of investment projects and destinations in terms of layout, locations, and return on investment (ROI). Right from sea-facing exotic apartments to duplex houses to mid-ranged apartments, the city of Mumbai and its suburbs have significant potential to give the best returns on real-estate investments. The region is also one of the most expensive real estate markets in the country and its residential sector continues to grow for decades. The developers of Mumbai also successfully attract PIO and NRI investors to sell more than 50% of their inventories, which is also a booster point for this prized real estate market. Apart from that, Mumbai also attracts the greatest number of migrants from across India in search of good income and lifestyle, which is a major reason behind high rentals as well as steep pricing of residential property.

The recent pandemic has encouraged more end-users to own a house in Mumbai real estate sector. In 2015, the investor-end user ratio was 45-55, which has declined to 30-70 in the current scenario. But the impact of the new policy change and the pandemic will begin to diminish soon in turn boosting the investors’ confidence significantly. The high rental and capital values of Mumbai’s real estate also make this city a favored investment destination for investors across the globe. 

At present, there are some specific areas in the Mumbai Region that are witnessing most of the real estate development. These destinations are expected to offer good ROI in the future due to sustained growth in price, supply, and demand over the years.      

1. Chembur

Easily accessible via Eastern Express Highway, Chembur offers excellent connectivity to major commercial hubs like BKC, CBD, Thane, and the central suburbs of Mumbai. Redevelopment work on slums and industrial land will give a major boost to the residential market in this area. Currently operational monorail and proposed Chunabhatti-BKC flyover, which will reduce the travel time between two locations by 30 minutes, are also attracting investments to this location.          

2.Worli

Centrally located between Mumbai’s two major commercial hubs Nariman Point and BKC, Worli’s sea-facing residential properties are high in demand. This location has a high price of a property as well as rentals in form of luxury apartments and duplex homes. Worli is an upmarket prime residential location of the Mumbai real estate sector, which yields high ROI and rentals.         

3. Malad-Goregaon

This area is situated along the Western Expressway and has a huge chunk of land with the necessary civic infrastructure in place. The location has various commercial hubs and is well connected via the Western rail line to other major parts of Mumbai. Besides, the proposed metro rail link will also boost the residential sector along this stretch, which is a plus for future real estate investment.

4. Kanjurmarg

Located right on Eastern Express highway with direct connectivity to Thane BKC and other commercial hubs are a plus for this location. Besides, industrial land is being converted into residential projects is giving a further boost to investment in this area. Connectivity via Central Line and developed civic infrastructure along with proposed metro rail link attract a lot of investors to Kanjurmarg.

5. Lower Parel

Known as the social hub of Mumbai, Lower Parel houses plush restaurants, shopping malls and clubs that give a lively feel to residents. Young professionals, who have workplaces nearby, love to stay in such locality to enjoy a good lifestyle. Linked through Western and Central rail lines to major locations across Mumbai, Lower Parel is also turning into a commercial hub of the city. With all amenities available in the vicinity, Lower Parel is a good investment destination from returns as well as a rental point of view.

6. Panvel

Its large natural landscapes and proximity to commercial hubs around JNPT make it an ideal investment destination. Due to lower land prices and cost of living than Mumbai, this location is also popular among investors who want to put their money in the affordable housing segment. Connectivity via both Western and Central rail lines as well as Mumbai-Pune Expressway to major parts of Mumbai and other parts of Maharashtra, along with the upcoming Panvel-Vashi metro link is a major boost for Panvel’s residential real estate sector.

7. Thane

Popular developers from Mumbai real estate market are now developing projects in Thane District, which is well connected to Navi Mumbai and Mumbai via Ghodbunder Road, Thane-Belapur Road, Eastern Freeway, Mumbai-Nashik Road, SCLR, and JVLR area. The adjoining city to Mumbai also offers a good landscape in form of lakes, hills, and open land space. Besides civic infrastructure in the Thane district is well developed and the new metro line to Kasarvdavali from Wadala will further boost the real estate sector here.       

Post covid snapshot of Bangalore real estate

Posted on by HomeCapital Team

Bangalore is identified as the epicenter of the niche IT sector of the country. It has its own flavour in the real estate industry. The end-users dominate the Bangalore real estate market and the control of investors is way too less. Thus, the property price spectrum remains narrow.

Bangalore, despite being a forerunner across quite a few aspects of life as well as industry, lacks public transport infrastructure. However, that leaves great scope for infrastructure development which can boost Bangalore Real Estate.

Let us have a look at the post covid development in the Bangalore real estate market across residential, commercial, and infrastructure domains.

Residential real estate

Most industries experienced a slowdown in the current pandemic era but Bangalore real estate showed a prominent rise in the growth graph. The first quarter of 2021 marked growth in new projects and Whitefield claimed 40% of the same.

In Q1 2021, 75% of overall sales were claimed by Whitefield, Hosur Road, and Bellary Road. Also, the quarter witnessed, a 1% increase in average prices and an increase of 26% in launches compared to Q4 2020. There has been a drop of 7% in the unsold inventory of Q1 2020 compared to Q1 2021 from 62,800 units to 58,350 respectively as per data from ANAROCK.

The factors like reduced loan interest rates, developers’ offers, and reduced registration contributed to the consistent growth in sales in affordable housing. On the other hand, NRIs boosted the high-end segment sales. Despite the marginal increase in prices, few developers continued with flexi-time payment, free parking, consistent floor-wise pricing, and complimentary interior design services.

The Government of Maharashtra had announced a reduction in stamp duty rates for all the property segments. However, the Karnataka Government announced the same only for the properties valued between ₹ 35 to ₹ 45 lakhs which limited the growth to some extent.

 Infrastructural Real Estate

As mentioned in the introduction, Bangalore has a great scope to develop the city infrastructure. A limited infrastructure invites severe traffic congestion, more cars, and a rise in pollution. So, it has a cascading effect.

Developed infrastructure plays a good role in the overall real estate growth. Currently, there has been some movement in Bangalore’s real estate infrastructure. South Bangalore has an ongoing metro project connecting Silk Board Junction through Bellandur, Koramangala, HSR Layout, and Electronic City.  Metro links are getting established in areas like Whitefield, Industrial Zone, City Centre, and International Airport.  

Kanakpura Road in central Bangalore, Whitefield in the east, and International Airport in the North will be connected through the upcoming Peripheral Ring Road (PRR).  Other road infrastructure like underpasses and flyovers will be developed near the Whitefield-Bellandur area that will ease the travel in this belt and subsequently help in the residential sales.

The offers and incentives from the developers and the reduction in loan interest rates make it a combo offer for property purchases. However, home buyers with insufficient savings need down payment financial assistance. HomeCapital has a solution in the form of Home Down Payment Assistance Program. It offers up to 50% of the down payment amount free of interest to be paid in 12 EMIs.   This program is offered for the benefit of home buyers by partnering with the leading residential developers across India.

This is the best time for property purchase in Bangalore for a new home, especially in the mid-segment and with the upcoming infrastructure the possibility of prices soaring is high.

Home Buying Decision

Posted on by HomeCapital Team

Owning a home gives a feeling of emotional satisfaction, pride and social security. Home buying is one of the biggest financial decisions that an individual makes in his entire lifetime.

With the growing needs of your family, you may consider buying a home at some point in time. With home buying being a preferred investment option in India, your personality and lifestyle requirements are quite likely to influence your home buying decision.

Some of the crucial factors that could impact your home buying decision include Evolving Family Structure, Demographics, Affordability and the Debate of Buying Vs Renting.

Today, the family structure has evolved to a great extent. Earlier Indian families were joint families where people used to live together in bigger homes. However, due to economic development, people started relocating to bigger cities for employment/business-related opportunities.

This has resulted in nuclear families opting to stay in compact homes. Additionally, with more women opting to work in order to contribute towards the family’s income, the family’s net disposable income has increased enabling it to choose a better home in terms of size and quality.

When it comes to the ‘Demographics’ aspect, the age, income levels and local culture of a specific area are important factors that influence the housing demands of a given location. For instance, any upcoming business district or financial / Information Technology (IT) hub in a particular area will create the need for value homes that will suit the requirements of a young set people and the growing demand will lead to a greater Return on Investment (ROI) in that particular area.

Your affordability to pay your personal down payment is another critical factor that would affect your home buying decision. How much amount you could afford as EMI will largely influence your home buying decision. If you do not have the necessary income to pay EMIs, you would prefer to rent a home rather than buying one.

The fourth factor that could influence your home buying decision is your view on the debate of Buying Vs Renting. If you do not stay in a particular place for a long period of time and relocate after a short tenure due to work commitments, then renting is an ideal option for you.

However, if you are someone who stays in a particular place for a long tenure, then there are high chances that you will be maintaining the rented property in a way that you are the owner. Hence, in such a scenario it is beneficial to buy a home instead of renting one.

Buying a home gives you stability and security as compared to renting one as you could be asked the vacate the property in the latter situation. In addition, renting does not provide for any ROI but when you buy a home its value appreciates with the passing time even during a recession.

Apart from these factors, various macroeconomic factors can influence your home buying decision. These include Interest Rates, Property Prices, Rising Income Levels and Government of the Day.

Any decline in interest rates leads to lower borrowing costs along with increased affordability and vice-versa. Any reduction in property prices leads to a rise in demand.

A market where the supply of housing units is more than the housing demand and leads to a reduction in property prices is known as a buyers’ market.

On the other hand, a market wherein the supply of housing units is less than the housing demands and leads to an increase in property prices is known as a sellers’ market.

Rising income levels increase the net disposable income of the household and boost the housing demand. The policies implemented by the Government of the Day i.e. the ruling government could also influence your home buying decision. Under the Credit-Linked Subsidy Scheme (CLSS), introduced under the Pradhan Mantri Awas Yojana, wherein the government will pay subsidy on the interest payments on the home loan up to a maximum of INR 2.67 lakh depending upon the income levels of the family & the size of the property.

If you are a first-time home buyer, you can avail of multiple tax benefits as per Section 80 C, Section 24 B and Section 80 EE of the Income Tax Act.

Studio Apartments: A New Way of Living

Posted on by HomeCapital Team

The concept of studio apartments is on the rise across crowded Indian cities, especially in Metro cities where the cost of living space is too high. In cities like Mumbai, owning or renting a 1 BHK or 2 BHK size flat is very expensive. Working professionals, singles, or even couples who are looking for low-budget housing arrangements, a studio apartment is an affordable option to choose from. Nowadays, more developers are also offering studio apartments due to growing demand and substantial rental incomes.

1. Studio apartment: concept and design

Basically, a studio apartment has all amenities inside one medium-sized space, without any partition, including a bathing area, bed, living space, and kitchen. Some developers offer partial wall structures for the demarcation of spaces, in order to have some privacy. Sometimes, people refer to 1 RK to a studio apartment but that is not true, such apartments have a different concept in terms of design, interiors, and price. One BHK flat has adequate demarcation between bedroom, hall, kitchen, and bathroom areas, while a studio is one large room that either has to be designed by the owner of that space or pre-configured by the developer.    

2. Size and price

They are based on the efficient utilization of available space, with minimum walls and barriers for the demarcation of different spaces. Normally, studio apartments have an open floor plan that varies according to the locality or the city. These apartments are offered in different sizes somewhere between 250 -700 sq. ft, which depends on the location, demand, and the developer.         

There is a range of price brackets for such apartments, which is targeted at urban homebuyers looking for an affordable living space in cities. A luxury studio apartment with commercial or well-developed infrastructure at central locations may cost up to ₹ 1 crore, while the same size and configuration may be priced at around ₹ 25 lakhs in suburban localities.        

3. Benefits  

Despite its small size and open floor design concept without demarcation, there are some benefits of owning a studio apartment:   

  • Affordable price in comparison to other flat sizes
  • Low maintenance is needed
  • Available at lower rent than apartments with higher configuration, so easy to rent out.
  • With efficient space allocations, suits best to single users
  • Located at central location giving better connectivity to prime city locations. 
  • Reduced power bills due to less energy consumption 

4. Rental income

Rental income from studio apartment is always good and that too at lesser investment than a 2 BHK or 1 BHK flat. However, the rental income varies with the location, city, amenities, the brand of the developer, and size of the studio apartment. In tier 1 or tier 2 cities, a normal studio apartment may give somewhere between ₹ 6,000 to ₹15,000 rental income. But a large-sized well-furnished studio apartment in central locations can fetch much better rentals.               

Who should one buy a studio apartment?

The category is very popular among homebuyers and the tenants, such as single professionals or small families, or individuals staying alone. Investors who want rental incomes also opt for such apartments. In metro cities like Bengaluru, Mumbai, or Delhi, a studio apartment located in developed areas can give better returns.       

Experts suggest some checkpoints before buying a studio apartment:  

1. Check out features and amenities

Always check the amenities and features offered by the developer along with the apartment such as furniture, space allocations, appliances design, etc. Natural light is essential in such accommodations.

2. Living room space

Make sure that your living space is not too small, as it will impact your comfort level and feel-good factor.

3. Budget

The price varies with location, builder reputation, amenities offered and design, etc. So always search properly from a budget perspective before buying a studio apartment.     

4. Local infrastructure

Always take a look around the project location and check the necessary infrastructure development around such as civic infra, supermarkets, shops, and convenience stores apart from educational institutes or workplaces nearby or connectivity to these places.  

Advantages of buying a property during its ‘new launch’ phase

Posted on by HomeCapital Team

The term new launch’ in the real estate sector refers to the launch of a pre-construction phase of a housing project. Some developers may launch a project while a certain percentage of the tower is ready. Property developers provide key information about the proposed site plan, project details, payment plan, discount on booking, location, completion date, etc. A promotional campaign is run across digital, social, and other advertising platforms to attract the homebuyers to own a property in the newly launched project. Some developers also offer attractive discounts on the first few units to spread the word and faster bookings.  

There are several benefits of buying property in the new launch phase of a housing project which is listed below:           

1. Early bird discount

Most of the developers offer attractive discounts on the initial launch or few units during the new launch phase of the project. Such offers bring significant numbers of buyers to the project. Homebuyers can avail of this opportunity to book a house at the minimum offer price. A real-estate project gives high appreciation from launch to completion phase, and homebuyers can save a big chunk of money (around 30-50%) through booking at the pre-launch stage. Thus saved amounts can be used for other expenses such as interiors, registration, and furnishing, etc.        

2. Choose the best unit 

Some homebuyers make various considerations to own their dream houses such as sun-facing, garden facing, proper sunlight and the view from the balcony, etc. Buyers can choose the best property for them in a new launch project at a low price without compromising on specifications. In addition, buyers can also ask the developer for structural modification or interiors of their choice. Customization or design changes at the initial stages do not require any reconstruction thus saving cost for both the buyer and the developer, hence fitting in the existing budget.  

3. Avoid price hike 

Apart from the discount and price hike after completion of the project, some other factors may also impact the property price. These factors may include commercial or residential development in the vicinity of a project, civic infra progress around the project site, rise in raw material, labor, or new regulations, etc. Generally, the developer also increases its basic sales price once the project takes off and buyers start showing interest. A ready-to-move-in property with a developed locality is always costlier than the pre-launch phase of a project. So, buying a property in the launch phase is always beneficial to the homebuyers for end-use as well as resale purposes.          

4. Smart choices

With prime city locations becoming over-crowded that lack proper green cover and open space due to residential and commercial development around, developers are moving to peripheral and suburban locations. Developers are also offering gated community projects for a better living experience. Homebuyers can have more open space and green cover in these new launch projects and enjoy better amenities at a lower cost.  

5. Advantage of payment schemes  

Special schemes like ‘No EMI Till Possession’ also help homebuyers to enjoy a free-EMI period till the developer delivers a project. This condition also pushes builders to complete the project within the deadline. Homebuyers are also happy as they have to pay just 20-25% cost of the project.     

A newly launch project is the best bet for the end-user or investors, as price appreciation is evident after project completion and other infrastructural development in the vicinity. However, experts caution homebuyers to buy a house from a RERA-approved builder project or a reputed developer. Homebuyers should check the RERA license number of the project before buying a specific project.        

Mortgage vs. cash: Which is the better option when buying a home?

Posted on by HomeCapital Team

The first and foremost question that a home buyer needs to answer is how to arrange the payment amount? Whether a buyer should pay in cash or consider the mortgage route. Both of these payment modes have specific advantages and disadvantages, and a prospective buyer must know about the pros and cons of each payment method. Experts suggest a balanced choice of having both components including cash and mortgage to avoid heavy debt and maintain a good financial backup for other expenses as well.      

Here are few benefits of both payment methods that can help homebuyers in deciding the best mode of payment to own their dream home.   

Benefits of cash payment

The biggest benefit of cash payment is that homebuyers need not pay any interest on the borrowed amount as well as other closing expenses. Banks and lending institutions charge several other fees for mortgage amounts such as processing fees, appraisal fees, etc. apart from interest on the disbursed amount. 

  • Home buying deals with only cash as the component are closed fast, as there is no background check assessment by the bank that causes delay in the process. 
  • Homebuyers paying cash to developers may strike better deal in terms of price negotiations as well as choice of the unit, as developers also show more interest in cash payments. 
  • Cash payment mode eliminates the fixed monthly deduction in form of EMIs, which also have significant interest component linked to it. A homebuyer has to pay for other expenditures after buying a house such as house insurance, maintenance cost, apartment association fees and property taxes etc. In absence of a mortgage loan, a homebuyer can easily manage other monthly expenses.      
  • Buyers also do not need to wait for getting the house registration papers, which are kept by the lending institution until the entire loan amount is settled by the buyer.
  • A home bought through cash payment has no further obligations to any third party i.e. lending institution, and the buyer can sell it any time irrespective of the market conditions.
  • Homebuyers can also save on price hike and compete better over the mortgaged property owners as it take longer to own a house through mortgage lending procedure. 

One should also remember that the higher the amount of cash invested towards the house, the greater is the homebuyer’s equity and ownership in it.

Advantages of mortgage lending  

Mortgaging a property also has several benefits, especially for those homebuyers who don’t have enough cash amount to pay. Mortgaging enables homebuyers to have sufficient financial stability or cash reserves for concurrent future expenses.  

  • Availing a mortgage loan also provides tax benefits to homebuyers in turn saving a significant amount on taxable income. Under IT rules, taxpayers are liable to get less tax deduction for home loan interest payments.    
  • Another significant advantage of mortgaging is that lending institutions initiates intense property verification process, which minimize the chances of illegitimate transactions and homebuyers can sure about the property.
  • By paying entire amount in cash, the money gets locked in the property and one can use only after selling the house. So growth of your money directly depends on property appreciation. In mortgage loan, a homebuyer can invest the cash amount in high return avenues.           

Both modes of payment have their respective advantages and disadvantages. Also, the choice depends on several factors such as availability of cash, monthly income, concurrent expenses, and financial stability of an individual buyer. Apart from that various calculations based on income tax deductions, interest rate benefits, investments and cash reserve requirements also impact the decision of payment for home buying.

*Note: Cash in this article is referred to as savings that have been accumulated by the homebuyer over the years

How to reduce your housing loan EMI burden?

Posted on by HomeCapital Team

Prices of housing real estate are compelling the homebuyers to opt for housing loans, as more than 90% of buyers cannot afford to purchase a house with their own savings. With plenty of lenders available in the market, who offer housing loans at competitive interest rates, homebuyers have several options to finance their homes. However, financial assistance comes with the burden of monthly installments or EMIs. The bigger loan amounts usually have higher EMIs and longer tenures say 20 to 30 years. Besides, if there are upward changes in applicable interest rates by the lending institution then the burden becomes more on monthly expenses.    

In case of some unanticipated situations; paying monthly EMIs can become troublesome, which further impacts credit score of the borrower. To avert such circumstances, most of the borrowers consider reducing their housing loan EMIs.

Here are some options that homebuyers may consider for decreasing the EMI burden to repay their home loan:   

1. Prepayment of the loan

The housing loan amount is significantly affected by the interest rates applied by the bank. Suppose a home buyer borrows 40 lakhs from a bank at an interest rate of 9% for 20 years tenure then he will end up paying more than 43 lakhs interest on the loan making the total amount paid to the bank over 83 lakhs. Experts suggest that if a borrower has cash then he must consider prepaying the principal amount, which will decrease the EMI considerably. A homebuyer should opt for prepayment of loan when interest rates are declining. 

2. Loan transfer to another bank

After comparing the housing loan interest rates with other lenders, homebuyers may consider transferring their home loan to another bank that is offering lower interest rates. But the new lender will consider your home loan transfer request as a fresh application and charge application fees, processing fees, etc. So always calculate the new charges and benefits associated with the new interest rates or tenure.    

3. Opt for EMI waiver schemes

For consistent EMI payers, banks offer attractive schemes by waiving some EMIs during the last phase of the loan tenure. But a borrower must think carefully about such offers made by the bank, as these loans may have higher EMIs than the regular ones.

4. Increase the EMI amount

As your earnings grow with time and you can afford higher EMIs, then you may ask your lender to increase the EMI amount. In that way, homebuyers may repay the loan much faster and become debt-free early. Even a slight hike of 5-10% in the EMI amount may affect the overall payment to the lender significantly.    

5. Always be ready for negotiation on new loan terms

Reserve Bank of India (RBI) keeps changing the repo rate – the rate that decides the interest rates offered by the banks – according to the market scenario. So keep a strict vigil on new repo rates and re-negotiate your home loan terms with the banks, as sometimes banks do not adjust the lowered interest rates by themselves.  

Some tips for new homebuyers to avail of housing loan:

1. Compare home loan offers from different lenders 

Homebuyers must compare different rates, tenure, costs, and benefits linked to home loans that different banks offer. Lenders may also vary interest rates and associated costs based on borrowers’ job profiles and credit scores. So, by knowing all aspects of home loan offers from different banks, borrowers can negotiate with lenders to strike the best deal.

2. Pay more in down payment

If possible, always try to arrange a larger down payment amount, if possible, as it will significantly reduce the EMI amount. A bigger down payment also enhances the chances for loan approval as banks consider such approvals less risky. HomeCapital helps first-time home buyers with up to 50% of the required down payment amount as an interest-free unsecured personal loan. This can be repaid by the homebuyer in 12 monthly EMIs.

3. Select a longer tenure for your housing loan

While applying for a home loan, young homebuyers should opt for a longer tenure to repay the home loan. This will reduce the EMI burden as well as enhance the loan eligibility of the borrower. But, to avoid larger interest amounts, new homebuyers must consider prepayment options as their income grows.        

In a competitive market, borrowing has comparatively become very easy but repaying the loan is also a huge task. So, always consider these options to ease the burden of EMIs on your housing loan.   

How to identify the right banks and lenders for home loans

Posted on by HomeCapital Team

Once the house you always desired is finalized, procurement of a loan is the next essential step. A well-defined process is followed to select the house and the developer.  The purchase is usually completed by a house loan. A smart choice of the right bank or lender made gives long-lasting peace of mind.

Let us check out the smart moves to select the right bank or lender for house loans.

1. CIBIL Score

This is also known as a Credit Score. A good credit score places you in a better negotiating position with the lender for interest rates. You may also be eligible for a pre-approved loan.

2. Rate of interest and allied charges

Rate of interest is the first and foremost factor in making the choice of the bank or lender as this defines the amount of monthly installment. However, allied charges towards house loans like processing fees, documentation, and legal fees cannot be ignored. Every bank levies a certain amount for these charges which include property valuation and assessment fees. This fee is calculated as per pre-defined basis points by the bank. The basis point is the common measuring unit for interest rates. One basis point is equal to 1% of the 1% of the interest rate. Alternatively, allied charges for banks range between 0.25%-2% of the total loan amount. Therefore, these allied charges are needed to be considered carefully along with the interest rates in finalizing the bank.  

3. Incentives for high credit scorers

As mentioned above, a high credit score has its own advantages. If you have one then this can be your trump card. A high credit scorer stands on a centralized negotiating position addressing interest rates, allied charges, and foreclosure charges. In addition, a pre-approved loan can give you the much-required head start for the house purchase.

4. Proactive offering of reduced interest rates

It is important to check whether your bank or lender is proactive about offering the reduced interest rates from the RBI in loan repayment tenure. This is one of the important aspects in after-sales service as well.

5. Fixed and floating interest rates

This is yet another decision to be made very carefully. A decade ago, house loans interest rates were more than 9% but with the passing years, it has now come close to 6.5%. A few years ago, it would have been the right decision to choose the floating rate option. However, when the interest rates are already low then it is advisable to choose the fixed-rate option as the increase in the EMI amount is inevitable.

6. Credibility of the bank or lender

It is significant to research and ascertain how strong the position of the lender is before applying for your house loan. It is advisable to choose a nationalized bank or renowned private bank for loan procurement.

7. Tenure of loan

As per RBI guidelines, banks are only allowed to grant loans up to 80% of the agreement value. So gauging your repayment capacity, you can avail of a maximum house loan of 80% of the property value. It is important that considering your income, the house loans length has to be chosen. The longest tenure around 20 years is worth considering as the EMI amount is the least. When the longest tenure is chosen, with the passing years generally income increases and some lump sum payments can be done resulting in a reduction of the loan as well as its EMI.

8. Time of disbursement

The time of disbursement varies from lender to lender. On average, if all your documents are in place and with a good credit score it takes about a week. Otherwise, it may take more than 2 weeks.

9. Required documents

Generally, the requested documents by almost all the banks are similar. Few important requested documents are listed below.

Property Documents

i) Registered Sale Agreement

ii) Occupancy Certificate

iii) Approved Plan copy and Conveyance Deed

Income Proof

i) Bank Account Statements

ii) IT Returns

iii) Certificate of Employment

iv) Salary Certificates if employed

Identity Proof – Voter ID card or Driver’s License or PAN Card or Passport

Proof of Residence: Aadhar Card Copy or Electricity Bill copy or Passport Copy

10. After sales service

Last but not least, it is essential to thoroughly research on After Sales Service factor of each bank. Poor After Sales Service may result in ignorance in certain aspects like interest rate reduction or any policy changes. This would result in excess payment. You need to check for banks having strong automated strong backend systems delivering regular account statements, timely interest certificates etc.

11. Foreclosure charges

These are the charges that lenders levy when the loan is to be paid off or cleared before the end of its tenure. Some banks or lenders do not levy these charges or can also be waived off at the time of negotiations.

All the moves mentioned above are like pieces of a structure. Hence, it is advisable to meticulously follow the above-mentioned process. Also, one should always be updated to be a step ahead or be at par with the updates of the lender.