With work from the home becoming the new normal, people are keen to buy a house property that is comfortable and sans the hassles of a rented property. According to a survey by the Indian Real Estate Report 2020, around 82% of respondents were keen to buy a house property in 2021. This might make you wonder if it is the right time to buy a new property in Mumbai now.
Here are a few aspects that can help you make a decision.
Ready Reckoner Rate/Circle Rate
Circle rate is a government-determined price below which properties cannot be recorded under government records. It is also known as ready reckoner rate. The government reduced the circle rate in Maharashtra that led to a reduction in the transaction cost of the properties. These rates were kept unchanged for the financial year 2022, which is a welcoming factor for people who wish to buy a house. In addition, a price drop in house property has led to more inclination towards investing in house property.
Decrease in Repo Rate
Reserve Bank of India repo rate has seen a drastic fall since 2019. While it stood at 5.15% in 2019 December, it came down to 4% in 2020. Moreover, it has been unchanged in the RBI’s monetary policy of 2021 too.
Home Loan Interest Rates
Because of the fall in RBI’s repo rate, the home loan interest rates have also been reduced in the past 1.5 years. Home loan rates, which ranged from 8-9% in 2019, are at 7% or less in the current financial year. Banks like Kotak Mahindra are offering one of the lowest interest rates in the market.
To boost the real estate market, the stamp duty was lowered in Maharashtra last year. However, the stamp duty cut was discontinued in this financial year. It is important to consider the rate of stamp duty while buying a property.
Considering the above-mentioned pointers, there will always be uncertainty in the prices of the real estate market. This is why you must consider your personal preference and financial viability before deciding if it’s the right time. Here are a few things you should take into account –
Currently, it is being suggested that you should not buy a house property for investment. It should be bought only for self-use. Also, experts opine that you should ensure that you live in the house for a significant period to realise its value, before selling it off.
Your credit score can significantly affect your cost of borrowing. In the current situation if you wish to purchase a house, make sure that you have a good credit score. Having a credit score of up to 700 or above can help you get the benefit of a higher loan amount at competitive interest rates.
Positive Cash Flow
Your decision should be based on your financial position. In the uncertain times of the pandemic and economic slump, will you be able to repay the EMI on time if there is a sudden cash crunch or loss of income? Buy a new property only when you have a positive cash flow to repay your loans.
The aspects affecting your decision to take a loan keep on changing every few months. Therefore, it is necessary to consider factors such as falling interest rates or stamp duty, and one’s financial stability. If you have evaluated these points, you can go ahead with your decision to purchase your dream home.
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