Home Loans – Rigid criteria is a dampener

JinsAugust's picture

In spite of the crying need for housing loans, the existing norms make it difficult for the truly needy to have access to them. The criteria adopted by housing finance institutions are rigid. The repayment terms in the form of monthly-equated installments are stiff. These act more as a constraint than as a help in time of need. Since most of the persons do not have sufficient saving capacity, they are left out.

Again, the commonly prevalent system of monthly-equated installments takes into account only the present earnings of the borrower and not the likely future increases in his income. What is required is more frequent use of graduated installments to keep in line with the future income profile of the borrower. This will automatically enlarge the number of potential borrowers.

If you intend to build your dream home in Kerala entirely by availing financial help from a leading financing institution, then you need to think twice as to the approach you intend to take. You need to plan meticulously the various aspects involved when availing finance from either a public or private lending institution. The first and foremost aspect to be noted is your total average income in any given month. The home loan you wish to take must cost you only about 40 percent of your monthly income as repayment costs.

With the financial meltdown in the United States due to the housing loan crisis, financing institutions in India have already tightened the rules and regulations governing sanction for a home loan. Gone are the days when the paper work for a home loan got completed in record time. Today most of the banks demand additional security and personal sureties, before issuing a home loan. In such a situation it is better to sign up for a home loan that has the lowest rate of interest without any hidden costs.