Home Sweet Home… A Dream
Hike in home loan rates-Industry remains unaffected but not the consumers
By: Lalsa Verma
With real estate booming, churning large chunks of profits for builders & making deep holes in the pockets of consumers, it is set for another twist. A relentless increase in home loan rates. This hike of mere 0.5-1% which seems to be too trifle to make an impact on the growth of the real estate industry poses to be a ruthless mammoth for the common man. And why I prefer calling this mere hike a mammoth will explain through an e.g., a man who has taken a loan of Rs. 2500000/20 years has an EMI of Rs. 19400 but with this hike in rates his EMI will go up to Rs. 24500. And with this additional expense of Rs. 5100 the monthly budget of a common man will surely go for a toss.
Whenever a problem arises it is bound to have some solutions to it and similarly even we have some solutions to this problem. But will these solutions actually help the common man is a million dollar question. Following are the few options available to the consumers:
1. SHIFT TO ANOTHER LENDER: It is a prudent option. If the new lender is providing a floating rate that’s atleast.5% less with the balance tenure of not less than 7-8 years then this is an option that you can bank upon despite prepayment charges that you might have to pay to your existing lender.
2. UTILIZATION OF YOUR SAVINGS: Your savings can always be used as a mode of rescue. You can use your savings and pre-pay a portion of your loan to keep the EMI at the same level. In most of the cases banks do not charge for partial pre-payments.
3. INCREASE THE TENURE: Check with your bank if they are willing to increase the loan tenure and keep the EMI at the same level. But remember that your bank will not increase the tenure beyond the retirement age (60 years for salaried and 65 for self-employed)
4. OVERDRAFT LOANS: You can also take overdraft loans against your savings instruments to pay the increase in the EMIs. It is a viable option as for small fees you can get huge amount.
5. ADDITIONAL LOAN ON THE SAME SECURITY: Approach your existing lender to provide an additional loan on the security of the same house. Most probably your existing lender will accede on granting you additional loan considering the hike in property prices in last two years.
6. ALTERATIONS THAT CAN BE DONE IN YOUR EXISTING BUDGET: Perhaps the best and the most viable option of course is to rework your budget and cut out the non essential items and try to manage in your monthly budget
The above mentioned solutions are a few options available to the common man and are expected to clear up if not all, al least few tension wrinkles from his forehead.
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