Loan options for real estate investments
Real investment requires proper planning and lot of on-ground work before you decide on the right channel. You need to be sure that you have access to cheapest home loans. Even when approaching a bank for example, you need to be sure that there is no other bank or any alternative, which you give you the benefit of a lower interest rate.
The reality sector is developing fast and while it takes time to select the best property to buy, it is good to do your research work on the best loan too. Keeping in mind your budget, you can choose the best option for properties in Koramangala, for example. Also, the real estate in Koramangala has multiple options and there is a new launch every month. So, first look into the property of your choice, workout your budget, and have a sketch for the amount of loan to be taken, after you know the down payment budget.
Then only it makes sense to look at various loan options for real estate investments. They are as follows:
It is the first option on your mind and perhaps, the most preferred and trusted one too. But it is not as easy it may seem. There is lot of documentation and paper work to be done. There are set government guidelines and rules to follow to meet the criteria of applying and getting your home loan approved. A very important part is the cost component. Higher the loan amount, the more difficult it is to prove that you can afford it. The normal expectation is to make a down payment of 20% of the total property cost, and rest of the amount can be financed by the bank. Your past credit record, now reflected in your CIBIL score, is very important. Your income will be reviewed and you need to specify the exact purpose of your property investment. Usually, your home loan cannot exceed a certain amount of your total income.
Housing Finance Companies
There is a huge bundle of companies which offer housing finance. These set of companies are good professional consultants to guide you through every step of financing a property. They go an extra mile to check the legal permits of the property to be purchased and help you during registration and document work too. The loans offered are subject to a maximum tenure; usually a window of 30 years and you can get up to 90% of the total property cost financed from these companies. Some of the reputed housing finance companies have a huge network base spread across India so that accessibility is never an issue.
Non-Banking Finance Companies (NBFCs)
Among a set of loans offered by NBFCs is home loans. Some recent media reports suggest that NBFCs have outperformed banks in context of home loans. However, they both offer the same services. One difference is that Banks are governed by the RBI Banking Act and NBFCs under the companies act. As a result, it is easier to avail a loan from NBFCs in comparison to Banks. But they charge a higher rate of interest. So depending upon the pros and cons, you can decide which channel to choose.
Housing Finance companies also fall under the category of NBFCs with the only difference that they offer loans specializing in housing only.
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