Is This The Right Time To Buy A House?

In India, everyone wants to own their own home. According to the 2022 Aspiration Index, one of the top goals of young Indians was to own their own home. The survey looks at India’s goals from the point of view of personal finances. According to the survey, buying a home is the most vital wealth goal and the fourth most important dream.

With home prices soaring and rates of housing loans rising, buying a home is a huge financial decision. People who want to buy a house often wonder when is the best time to do so. Your choice to buy a house would depend on several factors. These include what you can afford, local housing prices, and loan management.

There are no hard and fast guidelines for determining if now is a good time to buy a house. But do consider the following points.

Points to Consider to Buy a House at the Right Time

• A Trend of Low Prices

In the housing market, prices oscillate between low and stable. During these times, you should be able to get a great deal on a home.

• Interest Rate

After reaching record lows of less than 7%, interest rates have risen. Comparatively, the current 8.5% house loan interest rate is a terrific time to buy a home. Inflation is rising, and the central bank may raise rates again. So, it’s smart to lock in a real estate purchase while prices are cheap. When interest rates rise, so do EMIs and loan terms. So, it’s best to close the deal with low-interest rates.

• Have Enough Cash On Hand

Housing loans are a good way to pay for the house of your dreams. But you should know that the creditor will pay for your house in full. To buy a home, you’ll need a 20%-30% down payment. You should consider buying a home if you have enough money for a down payment.

• Having a Good Credit Score

If you have a good credit score, you can get the best deal on a house loan interest rate. Keep your credit score above 750 before buying a home. A higher CIBIL score will give you an edge over the other borrowers. Even a 25-basis-point difference in the interest rate will save money. If you have strong credit, it may be a good time to buy a home.

• Better Control of the Flow of Cash

When paying back a loan, it helps a lot to have a good handle on your cash flow. Many people don’t think about it or don’t realize it is important. Buy a house if you can handle your money now and in the future.

• Liabilities Under Verification

If your financing decisions are manageable, it’s time to buy a property. It’s important to remember that home loan EMIs are also a big chunk of money. To keep up, manage your costs, and have a regular cash flow. Also, pay off your loans quickly and don’t take out more.

Benefits Of Buying a House At The Right Time

• Source of Steady Income

More people want to rent homes these days. In the April-June quarter, demand for rental housing went up by 29.4% q-o-q and by 84.4% y-o-y. Average rents went up by 8.4% q-o-q. In the coming years, this demand will likely grow, making rental units a steady source of income.

• A Good Way To Stop Capital Loss

Real estate can protect your capital from inflation and other economic developments. RBI data indicates that property prices in the major cities rose by an estimated 15.1% between 2011 and 2021. This is much more than the average inflation rate of 6.15% during this time. 

There have been problems like the global economic crisis of 2008. But with the introduction of RERA, the demonetization of currency, and the pandemic, real estate demand has returned strongly. It gives investors more trust in the industry. Demand in the 13 cities checked by the index went up 16.9% quarter-over-quarter and 27.7% year-over-year. 

• Provides Good Liquidity

Property can also be used to secure loans. Since these LAPs are protected, they cost less than unsecured personal loans. You can pay them back over a longer period. The LAP market is expected to grow by 14% from 2025 to 2026. There are also ways for seniors to get a loan against their property without giving up ownership. This is called a reverse mortgage. 

Real estate has always been expensive, but things have changed in recent years. With real estate investment trusts, investors can now take on less risk. REITs are businesses that own, run, and finance real estate assets that bring in money. REITs are only allowed to own commercial properties right now. They might be able to buy malls, warehouses, industrial parks, and even homes in the future.

• The Power To Use

One of the best things about real estate investing is that you can use debt to pay for it. Unlike bonds, mutual funds, and stocks, real estate allows you to invest more than your net worth. Most lenders only need a down payment of 20–30%. Also, this leverage doesn’t cost much because home loans, at 7-8%, are probably the cheapest way to borrow money.

Within the 30% tax band, the tax breaks on interest bring the real loan price down to just 5-6%. To conclude, real estate helps make a portfolio of investments more diverse. It evens out the effects of more volatile investments, like stocks and equities. 

At the same time, there are problems like a lack of cash and information. So, background checks, and comparing prices are important. Buyers should also look at data reports and get advice from trusted experts to make the right choice.

Conclusion

Only a handful of the above factors can determine if now is the best buying time. Sufficient money for the down payment and EMIs is crucial when buying a home. If you are in this situation, you are in a good place to buy a home. 

The house loan interest rate and price trends don’t affect your readiness as much. Piramal Finance is a great option to learn such finance-related content. Visit their website to learn more about the products and services they offer.