We are Wealth Clinic Team
Since March 2020, when the Reserve Bank of India reduced rates to boost economic growth, interest rates have been at historic lows. Many banks have provided offers in home loans for consumers who are wishing to acquire residential real estate during the holiday season, despite the already low rates.
In recent times, the Union Bank of India became the latest lender to provide attractive deals on home loans. The bank lowered the home loan interest rates to an all-time low of 6.40 percent. Kotak Mahindra Bank, State Bank Of India, Bank of Baroda, and Punjab National Bank, among others, have continuing special deals on the house loan.
Because of the epidemic, property values have remained constant, making now a favourable time to buy. Housing sales are up 67 percent year on year, according to a recent report by real estate consultant Knight Frank, although prices remain stable.
It’s a good moment to invest in residential real estate.
Those with extra cash are considering buying second houses to take advantage of the favourable financing and price conditions. It is critical to keep Fixed Obligation to Income Ratio (FOIR) below 50% of take-home pay for the salaried class, as suggested by the real estate experts. A home loan is a long-term financial commitment, so families must examine their cash flow situation before taking it on. If you’re worried about repaying the debt, it is pointless to take on large-ticket debt.
If you decide to take out a loan, make sure to verify your credit score because a poor score could result in higher borrowing costs. Check the processing cost, any other bank charges, and any prepayment clauses, if any, among other things. You’ll have a clear image of the overall cost and repayment after you consider all of these aspects.
According to experts, now is an excellent time to buy a second home because property prices are expected to rise.
“The fact that demand for housing is so strong has shattered expectations that the pandemic would force property values to fall.” Prices will rise sooner rather than later as a result of this demand and rising building input costs to developers. Property values are currently at an all-time low. While developer’s costs have increased, they have been able to keep prices low to capitalise on the season’s demand – and have even added lucrative discounts and offers, says Santhosh Kumar, Vice Chairman of the ANAROCK Group.
Commercial Real Estate vs. Residential Real Estate
A commercial estate is a good option if you wish to buy more property simply to earn money.
Even though residential properties yield a rental income of 3-4 percent of the asset value and commercial properties yield a rental income of about 8-10 percent, commercial real estate has remained out of reach for most investors due to the large investment required and the complex technicalities involved (trust factor, etc.), commercial real estate has remained out of reach for most investors. On the other hand, the increase of fractional ownership is changing the game. According to Sudarshan Lodha, CEO and Co-Founder of Strata, the company does end-to-end asset management and due diligence in addition to drastically lowering the ticket size for Grade A commercial buildings.
By investing in commercial real estate through split ownership, investors can diversify their portfolio across a variety of assets such as warehouses and office space due to the much smaller ticket size compared to residential real estate.
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