Buying a property in a middle class family in India is largely dependent on the housing loan approval by the bank. It is the heartbreak moment for the individual and their dreams get shattered if the loan gets rejected for some reason.
Proper planning and preparation before starting the process of property buying will prevent you from unwanted market shocks and also increases the chances of loan approval.
The primary reasons for loan rejection is lower CIBIL score, existing loans and not eligible for the asked amount. There are ways to overcome this and you can re apply and secure the housing loan.
If your CIBIL score is above 750 you are good to go. Banks will offer you at the market rate or sometimes lesser than the market interest rate. If the CIBIL is less than 750 you have to improve the score by closing the existing loans, timely repayment, decreasing the credit utilisation and reporting the discrepancies in Credit report to the respective agencies, in India Experian and CIBIL are the two key credit rating agencies any discrepancies found on the report can be mailed to them or you can visit their regional office.
When you buy a plot in Chennai some banks are offering up to 100% of the property value whereas in apartments you can get upto 80% of the property value. Getting more loan amount means more EMI and more interest you will end up paying huge. Whereas when you opt for 80% or less you can save a lot in interest and the chances of loan approval is also high.
Besides opting for a housing loan to buy a plot, you can buy plots in monthly instalments from direct builders by which you can save an additional interest that comes with the housing loan. Few prominent developers in Chennai are offering EMI plots in Oragadam , Chengalpattu , Thiruvallur and in Sriperumbudur. These are emerging localities in Chennai and only suitable for investment purposes.
Either you go for EMI plots or a housing loan you need a down payment to fulfil your dream of owning a house. Here we are putting down some useful points on how to save money for housing loan down payment.
1. Start an SIP
This is the best way to save some money for down payment. Let’s say you earn 50,000/- per month at the age of 26 and if you can manage to save Rs.10,000/- per month in an SIP that can deliver 12% annual returns at the end of 10th year you will have around 23 lacs matured amount , you can use this as down payment.
Choosing the right mutual fund is the key for safe investment. Don’t be too ambitious while choosing the fund , higher projected annual returns may fail sometime. Choosing 12% returns is sufficient to realise your dream.
2. Kisan Vikas Patra Scheme:
Earlier it was opened only for farmers. Now in the latest amendment any individual can apply and a joint account of up to 3 individuals can open an account.
You can start with a minimum of Rs.1000/- and increase with the multiples of Rs.100/- there is no maximum cap in this scheme, you can invest as much as you can.
The amount invested will double in 115 months which is 9 years and 7 months . This scheme is also suitable for saving a down payment in 10 years.
3. National Savings Recurring Deposit Scheme:
Any individual can open this account and start saving with a minimum of Rs.1000/- and there is no maximum limit. You can invest whatever you can.
6.2% ( annual return ) quarterly compounded and reinvested in the deposit. You can avail a loan upto 50% against the deposit at 2% interest.
4. Direct Stocks :
Though the return on investment on the stock is higher than bank RD and fixed deposit, the risk is also high. In the volatile market you may lose some or all. Picking the right stock with strong fundamentals will deliver expected gain in the future.
You can start investing 5,000 per month in any trusted brands like TATA in a disciplined way.
5. Invest in Gold :
In countries like India , there is always a demand for this yellow metal called Gold. The price of gold is also gradually increasing year by year. You can invest in Gold bonds or buy gold coins/ bars.
6. Buy real estate :
You can buy land in the developing areas in your neighbourhood, hold it for 10 years and sell it when you are buying a house. Like the stock market if you have chosen the right locality and property this will deliver multifold returns in 10 years.
You can find many low budget plots in the outskirts of metro cities. Though you stay in Tier 2 and Tier 3 cities you can find the right developer and invest in gated community plots in the periphery of the metro.
Investing in a gated community keeps your investment safe from encroachments as well.
Since real estate buying is a big ticket transaction, opting for a housing loan is the only feasible option for working professionals to realise the dream of owning a house. To make yourself eligible for loan and for easy approval you must have a proper plan and a lot of patience with some ready down payment.