6 reasons why you should apply for a Home Loan during COVID-19

Here’s how taking a home loan can be beneficial during COVID-19

In the wake of COVID-19 and the resultant slowdown, public and private banks offer home loans at reduced interest rates to attract customers. But that’s not the only reason why you should consider applying for a home loan now. If you have always wanted to buy your dream home, the timing couldn’t be better. Here’s why you should apply for a home loan during COVID-19 times:

1. Lower home loan interest rates

The number one reason to consider buying a home is that home loan interest rates are currently at their lowest in the last decade, which is a big boost to home buyers. With lower loan rates, the total cost of house ownership goes down drastically, making it the right time to buy your dream home. The Reserve Bank of India (RBI) has ensured that repo rates remain lower to ensure that home loans are affordable for buyers. In addition, the demand in real estate is quite dependent on the intensity of interest rates as these directly impact the buyers’ monthly budget.

2. Stamp duty reduction by local governments

In a move to support homebuyers in this crisis period, many local governments have reduced stamp duty. Some state governments have introduced concessions on stamp duty for foremost sale transactions and to minimise stamp duty charges. Some governments have also reduced stamp duty charges for properties priced between Rs 35 lakh and Rs 45 lakh. Many other governments are taking the cue and are expected to reduce stamp duty, making it an opportune time to seal the deal. 

3. Lucrative schemes in the market

To clear existing inventory, real estate developers have launched lucrative schemes to attract customers and drive sales. These include attractive payment plans, subvention schemes, and discounts. Many realtors also offer refundable booking amounts, free cancellation, and cashback to buyers who intend to purchase homes during the pandemic. So, you can leverage the real estate slump and attractive home loan rates to get a great deal on your dream property.

4. Demand-side enablers

In previous crisis scenarios, the property market would typically get overheated due to higher valuations, declining Loan to Value ratios (LTV) and steep interest rates. The current scenario is more favourable to buyers with its higher LTVs, lower valuation, and cheaper credit availability. The price benefit and reduced home loan interest rates are only helping customers to buy property. The need to buy property is at an all-time high as people have realised the value of owning one’s home. 

5. Affordable housing and rural lending boost by RBI

The RBI announced two new liquidity facilities for National Bank for Agriculture and Rural Development (NABARD) and National Housing Bank (NHB) to boost rural lending and affordable housing. The total boost amounts to Rs 15,000 crore and is expected to ease the liquidity challenges at the bottom of the pyramid. This helps home borrowers because NBFCs, micro-lenders, and other small housing finance companies get liquidity assistance. This, in turn, translates into a lower cost of credit to the home buyer in the affordable housing and rural segments. 

6. Performance compared to other assets

Real estate proves to be a safe investment option and a hedge against inflation in an uncertain economic climate. In addition to volatile instruments or asset classes, investors must diversify their portfolios to invest in stable instruments. Considering that higher returns are expected once the economy is on an upswing, this is the perfect time to invest in your dream home.

Conclusion

Real estate is an excellent option for those who wish to diversify their investment portfolios. If you invest in a rental home, you can enjoy cash flow as the property appreciates. With attractive property prices, encouraging government initiatives, and attractive home loan interest rates, it’s indeed the right time to make your aspirations come true.

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