Home loan rates drop drastically with value on the rise
The year 2020 left us all with bittersweet memories. Many people lost jobs and their sources of livelihood. And industries suffered unfathomable losses. Additionally, more than a lakh lives were lost to the virus. But the only sweet part of all the misery was that people realised the importance of a 'pause'.
As offices shut down, people began working from home. Families came closer. They spent time with each other, and the lost human spark began to rekindle. People rediscovered the joy and comfort experienced by spending time with their loved ones. But what after the pandemic? Do we all go back to living as we did before? Or do we preserve the newfound joy?
With jobs getting remote and cramped spaces of the cities making it difficult to set work-life space boundaries, a vacation home, far from the hustle of the city guarantees that you do not compromise on your family time.
Let us look at the reasons why it is the best time to invest in a second weekend home away from the city now:
Low Home Loan Rates
The Reserve Bank of India, considering the situation in the country and the state of the real-estate sector, significantly cut interest rates over the last year. These interest rates now stand at historic lows of around 6-7 per cent in some banks. This decrease in interest rates is an excellent time to apply for a home loan.
Stamp Duty Rates Hit an All-Time Low
Maharashtra slashed stamp duties last year to fuel the plummeting housing market. However, this year as the stamp duty goes back to its regular rates, the Maharashtra government has kept its ready reckoner rates unchanged. These unchanged rates help buyers attract stamp duty and other taxes on lower base rates, making it the right time to invest in property.
Affordability Has Gone Up
Currently in the Covid-era, in an attempt to recover losses, the affordability of the real-estate sector has gone up. A comparison between affordability in the last decade suggests that in FY2000, on average, property prices were 5.9 times higher than that of the annual income of a home buyer. However in 2020, the average ratio between annual income and property rate came down to 3.3. The trends seem to continue more or less this year.
Property is a Way to Diversify Your Investments
Keeping all your money in stocks or mutual funds may be a good idea, but investing in a property gives you long-term benefits of its own. These diversified investments also help you garner benefits offered by the government.
Value is Always on the Rise
The fact about owning a property is that the value of it seldom depreciates. Consider towns or villages that are now townships. Metro cities are starting to crowd up, and builders are moving to unexplored regions. Guaranteeing that the property you invest in will reap benefits in the long run.
Diversify Income
A second home is an excellent option for a diversified income. Vacation homes are often given on rent to families or bachelors on a short-term or long term basis. Renting the property out helps with loan repayment while also working as an additional income source to support your family.
Work-from-home Patterns to Stay
Most corporates have extended work from home until next year and some have made remote working the way forward. Employers are now understanding the viability and affordability of working from home. Hence, the trend seems to be staying with us for a longer time. During such times, vacation homes can be ideal for a warm family reunion and get-togethers while ensuring your work life isn’t disturbed.
Future Planning
A vacation home or a second home is an investment into the future. It is almost the retirement fund that secures your life post-retirement.
An Escape from City Life
A second home away from the chaos of the city promises a calm and serene life, the break we often look for when we live in urban boundaries. Since the real-estate market is currently in a favourable state for home buyers, it is a ripe time to look at favourable prospects and grab that dream home you have always wanted.
The author is CEO, Nirvana Realty
DISCLAIMER: Views expressed are the author’s own, and Outlook Money does not necessarily subscribe to them. Outlook Money shall not be responsible for any damage caused to any person/organisation directly or indirectly.