What factors to take into account when taking out a mortgage?

The Reserve Bank of India (RBI) kept its key rates unchanged last month. He helped banks keep mortgage interest rates low. Some lenders even continued to reduce it further to support the ongoing recovery. Housing Development Finance Corporation, or HDFC, India’s largest housing finance company, offers home loans at interest rates starting at 6.7% to new applicants regardless of loan size or category of loan. use. She has joined with the State Bank of India and the Kotak Mahindra Bank in lowering mortgage rates in recent months. Kotak Mahindra Bank offers a rate of 6.55% per annum for a limited period, while SBI offers home loans starting at 6.7%. Interest rates on home loans fell below 7% last year. An important factor that decides the rate of interest is the credit rating of the borrower. For example, HDFC offers its special rate to those with a credit rating of 750 and above. Other factors include the buyer’s age and income. HDFC chief executive Renu Sud Karnad said record interest rates, government subsidies and tax breaks have helped homebuyers. Interest rates have fallen thanks to the Reserve Bank of India’s cash injection measures to support growth and credit use after the pandemic hit the economy. So far, mortgage rates appear to have bottomed out. However, there are a few things that customers should keep in mind before deciding to buy a home in the current scenario. In most home loans, the interest rate is linked to an external benchmark, usually the Reserve Bank of India repo rate. Therefore, customers will not be able to lock in at the current lower rates. EMIs will rise as the repo rate increases.

The repo rate remained unchanged at a record 4% in the last monetary policy announcement. One can also opt for a fixed interest rate to insulate their cash outflows from market fluctuations. But the interest rates there are a bit higher than the floating rates. Experts believe the central bank could raise interest rates in the first half of 2022. The RBI is also expected to slowly reverse its accommodative policies that have eased liquidity conditions. All of this can lead to higher interest rates. Homebuyers should also consider the cost of the down payment, stamp duty, registration fees, and property tax. In Noida, a 7% stamp duty is levied on the total cost of the apartment purchased. And the registration fee is 1%. These rates are different in each state. Of course, buyers can claim a deduction of up to Rs 1.5 lakh for principal repayment under Section 80C of the Income Tax Act. In addition to this, a deduction of up to Rs 2lakh can be used on the interest payment under section 24B. Borrowers should also consider loan fees such as processing fees, administrative fees, prepayment fees, conversion fees, legal fees, and inspection fees before taking the big step. Buyers should try to limit their EMI to 25% of their monthly income. And experts say they should invest in move-ready projects because it will save them rent. And this will also protect their interests, as several projects continue to be delayed for several years.

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