Smart ways to repay your home loan according to you and situation

Repaying back home loans is a mountain to climb for most people. These amounts are indeed high and after having possession of the home, you have no time relax.

What about the Finance companies?

Although home financing companies are coming up with wonderful customized payment options the process is not that easy. Beyond any doubt there are flexible ways but many payment options are directly linked with the construction of your house. Thus the process is a sort of win-win for both parties i.e. the lender and the borrower. Practically speaking, there are plans which increase the repayment capacity of the borrower with some tax benefits.

Six golden options

Let’s have a look at the various types of repayment plans existing in the market. One may go through them and analyze on correct terms before finally arriving at a conclusion.

  • Step up repayment loan- This is a repayment option that is directly linked to the borrower’s monetary growth. This option provides the borrower a liberty to have higher loan compared to a normal housing loan. Experts opine that this sort of repayment option is particularly suited to young owners. Since, one’s income keep on increasing with the advancement in his career, they can adjust the loan as per their need. One pays lesser EMI in the initial years and can adjust later on in the upcoming years. They can also enjoy tax benefits even if the EMI increases substantially.
  • Step down repayment loan- Just the reverse process of step up plan is followed here. EMIs are higher in the initial years and goes down in the upcoming years. This plan can be helpful for old owners. Senior citizens can avail this scheme and the lower repayments in the later years are indeed helpful for them.
  • Fixed and flexible installment plan- There are basically two aspects. When the plan is fixed, the EMI is fixed for a certain period. Later on it may get adjusted as per the market rate. One important feature of this plan is that the EMI is constant and does not vary according to the market. It can be of a bliss to the borrowers when interest rates are expected to rise. But one must be careful and check out the terms and conditions, since many lenders keep a provision of increasing the fixed amount at certain cases.
    On the other hand, flexible loan repayment scheme involves a higher EMI in the initial years. This decreases though in the later years of repayment. Parents who aspire to buy homes for their children can retort to this scheme as it can be planned in such a way that if they fail to meet the repayment, their children can do it successfully.
  • Tranche-Based repayment plan-This type of offer is provided by very few banks and financers. Under this scheme, a borrower can fix an amount as per their ability. They can pay the installments to the bank till the property is all ready for being possessed. The minimum amount payable is the interest on the total loan amount.
  • Accelerated repayment Plan-Under this scheme, borrowers can increase the EMI amount when they have means to pull. When there is surplus money or income is high, they can increase the EMI, to pay back the loan faster.
  • Balloon Repayment Plan- More or less it is similar to the step up plan. But with a major difference in the amounts of installments that are paid in the beginning of the loan term. The installment amount is initially low and starts ballooning higher in the later years of the loan term.

The plans discussed in detail may be of great help but analyzing your pocket and the market is very important. One must go ahead after judging all the pros and cons when it comes to finance.

Property selling in Hyderabad is a mountain to climb these days

Real estate and housing market in Hyderabad shows signs of being in trouble waters as there is a subdued sentiment among home buyers in the city. The trend gathered pace after the general elections and has been the same story thereafter. It has drastically dropped by a margin of 25 percent post the general elections held last year.

The Housing Sentiment Index Report or briefly HSI report of the fiscal period January-March 2015 clearly indicates this. The survey was conducted by two expert organizations-IIM Bangalore and Magic bricks. The HSI survey indicates the sentiment of prospective home buyers. The seller survey indicates the seller’s interests or preferences from the previous quarter. The latest edition of this survey reveals that there is a steady decline by 25 percent and the HSI at present is 89.

Home buyer’s sentiment is determined with respect to the HSI. Basically an HSI of 100 is taken as a reference point. When above 100, it means that there is a consensus amongst the general public that home prices will go up. If it lies below the 100 mark there is an expectation of home prices to fall down. Therefore, the present HSI of 89 clearly reveals that people of Hyderabad are in no mood to buy homes or property as they expect the prices to go down. Thus quite naturally there is an increase in the number of unsold homes and properties around the city.

What about the active buyers?

Active age groups (30-39 and 40-49) or the age group which records as the maximum buyers of homes are also pessimistic about the market. They too have no confidence about home prices going up soon. These age groups formed a large share of the respondents of the survey conducted (about 50%) and the HSI of these two age groups are 85 and 81 respectively.

Besides these active groups almost 70 percent of the respondents were found to live in rented accommodations. They recorded even lower HSI than the ones who are residing with their parents in their ancestral establishments. Hence, it can be easily conferred that prospective home buyers do not intend to buy new establishments, unless the prices are corrected.

Is it the desirable time for business with the property?

An important outcome of the survey also revealed that about 65% people are looking for a property. However none of them are seeking it for an investment. They want it for residential purpose. The low confidence of buyers and such prices hints at one common thing-this is not the ideal time for a property sell.

Most of the respondents, almost about 31%, were interested in properties in the range of Rs20-40 lakhs. This trend has faced a steady decline as the percentage fell by 3% and is 28% now-a record low HSI. Around 17% of the respondents were seeking property below Rs20 lakh.

South Hyderabad had been that part of the city always preferred by prospective buyers. Here, a steep decline is indicated with the percentage falling by 34%. This is indeed a matter of concern and real estate experts must find out some ways to make gate away from this scenario.

The low index and poor confidence in the market establishes a negative phase amongst developers or sellers. Needless to say, every seller wants to have a prospective buyer of his property. However, with such indexes and prices not going up it is never a good sign. Those in search of a prospective buyer need to wait for long as the scenario changes and there is a turn of table. Unless there is an indication of the home prices going up significantly, selling property is not desirable.