Share about your Home Loan experience

[Kiranonlinee]

Hi folks,

I'm wanted to go for home loan which bank is best and what are all the doc and other things to be taken into consideration.

I have a pre approved home loan offer of 45L from icici at an interest rate of 7.65%

Should I go for it.

Please share your experiences of home loan.

Thanks,
Kiran.

Mine is a salary account of icici

 

[ashwink]

Interest should be lower ... How did you get pre approved offer

Haan even in pre approved offer but interest rate is higher.

 

[ashwink]

How much?

It depends on past credit history but you can negotiate with bank

 

[prc1990]

Then negotiate for interest ... Ask them for 5.5-6%

Bank bolega: Nikal pehli fursat pe 🤣.

 

[jay]

Then negotiate for interest ... Ask them for 5.5-6%

The current RBI Repo Rate is at 4.90%, no bank will give you a home loan at 6% now.

 

[jay]

What's the minimum?

For all new loans above 7%, realistically more around 7.3-7.5% and higher.

 

[Souvik]

To cut the long story short,

1. Negotiate on the interest rates with more banks.
2. Try having a fixed rate based loan, as interest rates are about to rise in the long term and banks will get the most out of you in a floating rate scenario.
3. Go for Public sector banks which are less aggressive in loan recovery. This is one occasion where I would suggest going to a PSB.
4. Read carefully loan terms and conditions especially on prepayment and early closure charges.
5. Understand clearly how much you will ending up paying in total, Principal+Interest for a 10/15/20 year loan. Often you end up paying close to double the value of your original loan over time, while banks would make merry to mint money out of you.
6. Better to minimize the value of loan and arrange more money from friends, relatives.
7. It might cost a bit more, but look for a good insurance to backup your loan, just in case.

 

[jay]

To cut the long story short,

2. Try having a fixed rate based loan, as interest rates are about to rise in the long term and banks will get the most out of you in a floating rate scenario.

You do not get fixed-rate mortgages/home loans in India. They are always repo-linked rates aka floating-rate loans. In some very tiny edge cases, a bank might offer you a fixed rate for the first 1 or 2 years but even that is rare. Mortgages in India are floating.

 

[Kiranonlinee]

To cut the long story short,

1. Negotiate on the interest rates with more banks.
2. Try having a fixed rate based loan, as interest rates are about to rise in the long term and banks will get the most out of you in a floating rate scenario.
3. Go for Public sector banks which are less aggressive in loan recovery. This is one occasion where I would suggest going to a PSB.
4. Read carefully loan terms and conditions especially on prepayment and early closure charges.
5. Understand clearly how much you will ending up paying in total, Principal+Interest for a 10/15/20 year loan. Often you end up paying close to double the value of your original loan over time, while banks would make merry to mint money out of you.
6. Better to minimize the value of loan and arrange more money from friends, relatives.
7. It might cost a bit more, but look for a good insurance to backup your loan, just in case.

Yes that's true we will endup paying double the money we barrow but when we consider inflation it will be like a trade off.

Current inflation is 7.2% or some thing arround 6.5%

I don't know whether my thinking is correct or not little bit worried when I think about paying double the amount we have taken ☹️

Please some one provide me a clarity with numbers considering inflation as well.

 

[prc1990]

Yes that's true we will endup paying double the money we barrow but when we consider inflation it will be like a trade off.

Current inflation is 7.2% or some thing arround 6.5%

I don't know whether my thinking is correct or not little bit worried when I think about paying double the amount we have taken ☹️

Please some one provide me a clarity with numbers considering inflation as well.

If you want to reduce the burden of the interest, you may also consider lesser tenure if you are ready to be aggressive based on your financial stability.

Also plan for some investments in the meantime so that this can be paid off ahead of your loan tenure if possible.

 

[naviworks]

You do not get fixed-rate mortgages/home loans in India. They are always repo-linked rates aka floating-rate loans. In some very tiny edge cases, a bank might offer you a fixed rate for the first 1 or 2 years but even that is rare. Mortgages in India are floating.

Not entirely true. There is a loan of 25 lakhs (I think…don’t remember exactly) which is on simple interest. It is called HBA. But unfortunately it is only for central government officials.

So if you have a close family member who is a government servant, they might able to get you ( I know it’s a long shot but still…)

google/YouTube HBA for more information

P.S. My post here is intended to just inform that an instrument exists on SI. Nothing else.

 

[Souvik]

Yes that's true we will endup paying double the money we barrow but when we consider inflation it will be like a trade off.

Current inflation is 7.2% or some thing arround 6.5%

I don't know whether my thinking is correct or not little bit worried when I think about paying double the amount we have taken ☹️

Please some one provide me a clarity with numbers considering inflation as well.

A loan is not the best option, thumb rule, not trying to be rude here but if I cannot purchase/afford and asset now, I perhaps am not eligible for it yet. But loans are pretty common so if you think wisely actual inflation numbers are pretty manipulated so what you think is 7% maybe well around 12% or more. You can derive some solace to think interest= inflation but both of them would erode your earnings which may not increase aggressively.

However inflation and interest rates both would rise, but would our incomes rise proportionately to compensate accordingly, the answer may not be a confident Yes for all. So beware of substantial debt and the subsequent payouts as it can turn out to be a long term burden/liability.

 

[jay]

Not entirely true. There is a loan of 25 lakhs (I think…don’t remember exactly) which is on simple interest. It is called HBA. But unfortunately it is only for central government officials.

So if you have a close family member who is a government servant, they might able to get you ( I know it’s a long shot but still…)

google/YouTube HBA for more information

P.S. My post here is intended to just inform that an instrument exists on SI. Nothing else.

You’ve answered yourself. That’s not really home loan, it’s called house building advance and even there the ROI is not fixed, it is reviewed every 3 years based on the 10-yr-GSec yields.

 

[jay]

Not entirely true. There is a loan of 25 lakhs (I think…don’t remember exactly) which is on simple interest. It is called HBA. But unfortunately it is only for central government officials.

So if you have a close family member who is a government servant, they might able to get you ( I know it’s a long shot but still…)

google/YouTube HBA for more information

P.S. My post here is intended to just inform that an instrument exists on SI. Nothing else.

No debt for a house sounds good on paper but not really practical. Leverage when used effectively can be beneficial to building your wealth and a mortgage is one of the very few products where leverage makes more sense than spending your capital.

 

[Souvik]

What if one simply cannot afford at one go ...

It's best to wait and at least save substantial down payments for the asset/house rather than take a loan for say 50 lakhs and pay 80-90 lakhs over the next 25 years, not to forget the tension surrounding constant EMI's. The idea is to minimize the amount of debt, coz there is no free money until and unless you're a big businessman.

There are pretty much many buy v/s rent analysis available. And rent comes up mostly cheaper until it is a commercial/income generating asset.

@anirbanm Since you have put up in lala land that is Bengal-uru which charges tremendous housing premium for crumbling infra and miserable traffic along with a top up of water and power shortage across the city. I suggest you don't even think of giving your hard earned money to these corrupt politicians who have gleefully inflated housing market in Bengal-uru.

 

[Kiranonlinee]

It's best to wait and at least save substantial down payments for the asset/house rather than take a loan for say 50 lakhs and pay 80-90 lakhs over the next 25 years, not to forget the tension surrounding constant EMI's. The idea is to minimize the amount of debt, coz there is no free money until and unless you're a big businessman.

There are pretty much many buy v/s rent analysis available. And rent comes up mostly cheaper until it is a commercial/income generating asset.

@anirbanm Since you have put up in lala land that is Bengal-uru which charges tremendous housing premium for crumbling infra and miserable traffic along with a top up of water and power shortage across the city. I suggest you don't even think of giving your hard earned money to these corrupt politicians who have gleefully inflated housing market in Bengal-uru.

Yes you are true but at my place(Andhra pradesh) real estate is booming like any thing the same house / flat which costs 19L before 6 months now it is selling for 30L , I was literally shocked to see such prices

 

[Souvik]

Yes you are true but at my place(Andhra pradesh) real estate is booming like any thing the same house / flat which costs 19L before 6 months now it is selling for 30L , I was literally shocked to see such prices

Exactly, all due to this cheap credit availability/less interest rate fiasco, 1 minute loan, Easy loan and all. At such times a recession is also needed/inevitable to mitigate these runaway asset/housing price bubbles and only post that you would find the same 19L house available for 20 or 21L.

A interest rate hike is expected to dampen demand out there and hence cool off this brazen market hopefully, best is to wait and watch the economy dancing around you for the next 1-2 years at least. Assuming covid does not hit back hard still there would be some price corrections in the market as interest rates spike up.

In my case, I was about to buy a car in cash sometime back, but with so much demand in the market fueled by cheap credit all over amidst chip shortage and since everyone is eager to buy a car no matter if they can afford or not manufacturers and dealers had no incentive to release attractive offers like earlier, I have since deferred by purchase plans and will wait for some more time for interest rates to grow and drive most ineligible buyers out of the market and then will try to move in.

Its always a zero sum game either you exploit the market or the market exploits you Both cannot win at at the same time.

 

[souvikdey2002]

A loan is not the best option, thumb rule, not trying to be rude here but if I cannot purchase/afford and asset now, I perhaps am not eligible for it yet. But loans are pretty common so if you think wisely actual inflation numbers are pretty manipulated so what you think is 7% maybe well around 12% or more. You can derive some solace to think interest= inflation but both of them would erode your earnings which may not increase aggressively.

However inflation and interest rates both would rise, but would our incomes rise proportionately to compensate accordingly, the answer may not be a confident Yes for all. So beware of substantial debt and the subsequent payouts as it can turn out to be a long term burden/liability.

Dear, Mr. Shashi Tharror(2nd)

Sometimes don't you feel writing normal English or this is your spontaneous flow?
You have to understand that everybody here is not a mobile vocabulary, we need to use Oxford sometimes to understand what exactly you are trying to say.

While reading your posts give us idea of your "Insane Stock of Words" but it is takes equal patience to understand it. 😄😄😄😄😄😄

 

[souvikdey2002]

Exactly, all due to this cheap credit availability/less interest rate fiasco, 1 minute loan, Easy loan and all. At such times a recession is also needed/inevitable to mitigate these runaway asset/housing price bubbles and only post that you would find the same 19L house available for 20 or 21L.

A interest rate hike is expected to dampen demand out there and hence cool off this brazen market hopefully, best is to wait and watch the economy dancing around you for the next 1-2 years at least. Assuming covid does not hit back hard still there would be some price corrections in the market as interest rates spike up.

In my case, I was about to buy a car in cash sometime back, but with so much demand in the market fueled by cheap credit all over amidst chip shortage and since everyone is eager to buy a car no matter if they can afford or not manufacturers and dealers had no incentive to release attractive offers like earlier, I have since deferred by purchase plans and will wait for some more time for interest rates to grow and drive most ineligible buyers out of the market and then will try to move in.

Its always a zero sum game either you exploit the market or the market exploits you Both cannot win at at the same time.

So which car did you finally buy??
Audi A8 or A10??

 

[Souvik]

Dear, Mr. Shashi Tharror(2nd)

Sometimes don't you feel writing normal English or this is your spontaneous flow?
You have to understand that everybody here is not a mobile vocabulary, we need to use Oxford sometimes to understand what exactly you are trying to say.

While reading your posts give us idea of your "Insane Stock of Words" but it is takes equal patience to understand it. 😄😄😄😄😄😄

Sir, I am nowhere close to the individual you mentioned, its spontaneous but owning to the feedback I certainly feel I should make it more simple for greater acceptance in the forum.

Agreed, if he could kindly elaborate what exactly he means, maybe it'll be better for the greater masses.

1. Interest rates are supposed to rise in the immediate short term so staying away from floating rate credit is the best option I see now
2. Inflation is in double digits for sometime now, and has to cool off and as inflation goes down, asset prices/housing prices will have a fall/correction too.
3. So its just better to wait and watch and build some savings to increase down payment for a lesser amount of home loan (going by the topic of this thread).

Personally speaking, I love Bangalore. And I've seen far worse traffic in many other places ...

Agreed, if he could kindly elaborate what exactly he means, maybe it'll be better for the greater masses.

I have been for 10 years in Bangalore, since April 2010, till March 2020, have slowly seen it crumbling. Good things in Bangalore are nice people, good weather but that does not discount the inconveniences like 18% lifetime road tax to drive on potholes, 10 month security deposit for rent, regular power cuts like UP, water shortage, bus conductors amusing you with change illa (change I dont have) in buses, Silk board nightmare, an airport which takes minimum 1.5 hours from the heart of the city with even minimal traffic...

So which car did you finally buy??
Audi A8 or A10??

I am nowhere as rich as you to even think of Audi/Mercedes etc........planning to buy a Maruti or Nexa for better value for money, that too with good offers.