How to Know Whether It's a Good Time to Buy a Home?
Owning a house has long been a symbol of success and prosperity in our country. And it is no different for the present generation. Did you know that 75% of millennials in the middle-income category want to buy a house in the next 3 years? This was revealed in a survey by 360 Realtors, covering 1200 respondents with an annual income exceeding ₹ 7 lakh.
Buying a house has further become easier with schemes such as PMAY also known as Pradhan Mantri Awas Yojana. However, timing remains a major area of concern whenever considering a real-estate investment.
Here are some ways to understand whether it is the right time for you to take the plunge.
The first thing to consider is your financial savings. Although buying a house has become easier with simplified home loan application processes and interest rate subsidy schemes, you should still have some amount in your savings account. That should be enough to make at least a 10% down payment, and cover your emergency expenses later on. Down payments can range anywhere between 10% to 25% of the property’s market value. Plus, you should have a stable source of income to repay the loan over the course of several years.
And when thinking about the cost, take the latent charges into consideration as well. These could include stamp tax, registration cost, homeowner association’s fee, utility cost, legal fees, insurance costs and so on.
If you are planning some big expenses in the next few years, then this might not be a great time for you to buy a house. It is important to remember that you have to pay home loan EMI for the next few years, and that might be more than the rent you are currently paying. So, big purchases such as a new car or sending your child to a foreign university might become out of the question; unless you have a high income to support that.
Another deciding factor is the home loan interest rate. Lower home loan interest rates mean lower EMIs and less tenure. And the good news is the interest rates have been falling over the past few years. This is because the repo rate set by the RBI in 2020 is 5.15%, which is quite low. This allows banks to offer more affordable home loans.
PMAY rural and urban schemes further allows more interest rate subsidies.
Pradhan Mantri Awas Yojana; a housing scheme introduced by the government in 2015, offers interest rate subsidy on home loans below the value of ₹ 30 lakhs. Under PMAY, an interest subsidy of 6.5% can be provided for LIG, 4% for MIG I, and 3% for MIG II. But there are certain eligibility criteria for Pradhan Mantri Awas Yojana that you must satisfy to avail the benefits.
A large number of properties remain unsold, which has helped property prices to become more affordable in the past few years. In fact, in the affordable homes category alone more than 4 lakh houses remain unsold in India’s nine key property markets, according to data provided by PropTiger.com. This could mean more flexibility for you to bargain with your developer.
With government schemes such as PMAY, owning a house has become easier; even in rural and urban areas of the country. However, consider your personal finances and research on market conditions properly before making a decision.
