Latch on to the certainty of a fixed rate home loan

 Any Indian middle-class family's desire is to acquire a home. This is true regardless of where they live in the city.

When a youngster secures a stable employment, there is tremendous parental pressure to purchase a home. In the majority of cases, the child is fulfilling a parent's unfulfilled wishes.

In such instances, the demand is more of an emotional one, and logical risk analysis of one's resources is dangerously overlooked. Emotional decision-making replaces rational decision-making, and the borrower becomes over-extended and trapped in a debt trap. At all costs, this must be avoided.

Long-term impact

Because mortgages are for 20 to 30 years, the financial calculations neglect the fact that these actions have a long-term impact.

The majority of us believe that the price of real estate only travels in one way, that is, upward. Nothing could be further from the truth, as evidenced by housing prices in every major Indian city over the last decade. When purchasing a home with a high mortgage, it is important to remember that a mortgage agreement is a lifelong contract with consequences that will be felt for the next half of one's working life.

It assumes that your salary or income will continue to rise indefinitely. In the vast majority of circumstances, reality differs from expectations. This is one of the lessons we've learned from the present pandemic.

If you want to buy a house with a mortgage, buying a ready-to-move-in flat is the best option. Many middle-class families have learned to their dismay that numerous builders have received payment from banks but have failed to complete the flat construction within the stipulated time frames. Even after a decade, they have not been delivered in some situations.The law of the land is clear: the borrower is responsible for repaying the financial institution, whether the property has been completed and handed over or is still in the construction phase. This implies you'll have to pay EMIs while challenging the builder in court.

Choice of mortgage

After agreeing to proceed with a loan to acquire a property, the most significant decision a borrower must make is whether to choose a fixed rate or a floating rate mortgage.

Mortgage interest rates are determined by the Reserve Bank of India's monetary policy. If the Reserve Bank continues to drop interest rates, mortgage rates are likely to remain low, with more reductions expected in the coming months. When the Reserve Bank becomes more hawkish and raises interest rates, bank lending rates will rise as well.

Several such monetary cycle reversals are likely to occur during the life of a mortgage.

Mortgage interest rates are currently at their lowest level in a long time. Inflationary forces are raging over the world, and it's safe to predict that interest rates in India will rise in the next six months and stay high for at least the next two years.

Monetary policy changes

The following are some of the reasons why the central bank might adjust its monetary policy:

Because inflation in the United States is strong, interest rates in developed markets around the world are expected to climb (inflation is at a 39-year high in that country).

When the Federal Reserve of the United States decides to raise interest rates, monies invested in other markets begin to migrate back to the United States.

To keep the rate disparity between the two economies at the same level, the Reserve Bank of India will be required to hike interest rates.

Two, throughout the last seven months, prices of common commodities in India's wholesale sector have remained high by around 10%. The consumer price index has yet to reflect it.

Several companies providing fast-moving consumer products and vehicle manufacturers have recently passed on the expenses to consumers due to growing raw material costs.

Protecting the consumer

The RBI will be forced to change its accommodative monetary policy and raise interest rates as a result of this.

As a result, a borrower's choice of fixed interest rates makes sense.

Normally, financial organisations only provide a three-year fixed rate. It is advisable to lock in current low interest rates for the next three years.

On asset price forecasts, a word of caution is warranted. Borrowing rates that are too high serve as a gravitational attraction on asset prices. As a result, as long as the interest rate stays high, no considerable growth in real estate values may be expected during the following three years.

Conclusion

There's no need to be discouraged if your personal loan application is turned down. To boost your chances of loan approval, simply work on improving your credit report and following the methods outlined above. Once you've completed this checklist, you're ready to submit your personal loan application.To find about the best pricing and deals, call our toll-free number +91-9477079053. They'll help you in every way they can. Please contact me at Best Home Loan In India if you have any more.