With many positive changes, 2020 looks like a good year for the housing sector as buyers can finally acquire their dream home.
Property prices, currency, and inflation are stagnant, interest rates are lower, and numerous tax incentives and subsidies like PMAY Home Loan are giving the real estate market the much-needed boost with a new wave of affordability.
If you look at the past few decades, you can see there is a tremendous change in the Indian Home Loan Industry. From the digital tools to various government schemes, the entire home loan process has become more simplified than it was in the past.
Also, banks were using the Marginal Cost of Funds based Lending Rate (MCLR) to decide the interest rates on home loans. However, recently Reserve Bank of India (RBI) has taken a big step and made it mandatory for banks to use the external benchmark lending rate to decide the interest rates on retail and home loans.
However, with the advent of private sector banking, things began changing as these banks started offering various options for in the home loans segment. Considering the market scenario, Shubham Home loans are now being curated in a manner that is more beneficial to the borrower. Here are some trends that can be seen in the home loan segment:
Determination of loan amount
In the initial stages, RBI mandated some limits on lending as well as disallowed funding registration charges on property purchases. A bank will start by looking at your income statement and will calculate your total monthly income by adding up your salary, interest income, etc. Shubham Home Loans made it easier for borrowers and allowed all costs associated with the property purchase to be included for calculating the eligible loan amount, including registration and stamp duty charges.
Calculation of interest
Starting with interest calculation on a yearly basis. Since savings depend on a variety of factors like income level, lifestyle, etc.
Traditionally, EMI is calculated over the tenure of the loan and includes a principal repayment component and an interest payment component. The feature of EMI is that during the initial months of the tenure, the interest payment component is high, and the principal repayment is proportionately very low.
If you are already paying some other EMI, that amount will be reduced from the calculated savings. Therefore, lenders began offering Flexi-EMI options where, as a part of the original loan, borrowers could opt for a step-up Flexi EMI plan, step-down Flexi EMI plan, or a standard EMI plan.
Modernization of systems
With the advent of technology, several systems and processes have seen significant changes.
Gone are the days when you would have to wait for a representative to explain the home loan process and the documentation. Now, all the information you would need on your home loan eligibility, documentation, and process is available online. You can even calculate your EMI online with an EMI calculator before you avail of a home loan.
Better customer experience
The home loan industry launched many innovations that included involving builders and developers in the home loan process. Lenders began providing one-stop resources for home loans tying up with builders, promoters, and other stakeholders. They increased the use of technology to provide a better experience to borrowers.
Pradhan Mantri Awas Yojana (PMAY)
The need for housing has been felt quite starkly; hence the government has declared a mission to provide housing for all by the year 2022.
This is one trend that means a lot to the home loan industry as the government has announced various incentives for the weaker sections to help them to acquire a roof over their heads through its PMAY scheme.
The government has given impetus to the affordable housing segment by extending tax holidays by a year for builders in the affordable housing sector.
While these are the recent trends in the home loan industry, the segment will go through additional changes as well. These measures bring in major changes in the way real estate is perceived as opposed to what ensued in the earlier times.
All in all, the home loan industry is undergoing a metamorphosis from a topsy-turvy state to a more organized and transparent state.
If you have any more queries, do share your thoughts in the comment section below.