Opt for a Housing Loan in India

By: Rakesh Malhotra

Buying a home on a loan has become so easy. This way it's more affordable.

Home loans in India are of two types floating and fixed. In case of floating loans, they vary according to market conditions. But if you take a loan on a fixed rate, the rate of interest remains the same through out the repayment period. So it is for you to decide what kind of a loan you want.

The recent doubts to whether the real estate will be hit by an increase in loan interest rates in India have proved unfounded. The housing loan demand has witnessed a strong growth during July September 2006 when the interest rates went up from 8.5 % to 9.5%. This rise has had no effect on the demand for home loans. Due to the boom in construction in the country, the demand for loan for residential units is very strong.

Also, the tax breaks for home loans and inflation's impact on home loan repayment are in favor of the investors. Under the present tax rules, you get a tax break on interest repayments for home loans to the extent of Rs 150,000. As inflation rises, the real costs (incomes) also rise. Since there is a trend of significant salary growth in India, that also is helping more people acquire loans. Though housing prices are predicted to tumble over the next few years, they are as predicted to recover quickly. So, all the more reason for you to go for that new home loan purchase!

When you need capital for some needs like home improvement, you can take a home equity loan. In real estate the owner's equity in a property is the difference between the market price of the property and the owner's mortgage debt. If you can apply for the lowest equity loan, it can help in substantial saving over the loan repayment period.

Before you sign up any loan agreement scrutinize it carefully to make sure that you have read the small print. You need to be aware of the essentials before you take the loan. So, gather all the relevant information you can. Also, keep a track of the various interest rates in the market. Don't be hesitant to ask the bank for a better deal.

A sensible thing would be to consult a home loan mortgage broker. Though you will have to pay him a bit extra, he will help you get the best deals in the market.
So, explore your potions extensively and carefully chose a loan for your dream home.

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