Getting Home Loan

The financial commitment for 15 long years, coupled with unpredictable movement of interest rates, has put Avinash in a fix. But every time interest rates were hiked, Avinash clearly remembered his colleagues' grumble . They complained that all the money they paid back to the bank was offset and the loan tenure was reset to what it was when they took a loan. Were impressive loan schemes a mere debt trap from which he could never emerge out? Would he end up paying more if he took a home loan?
True that the interest rates were at their most enticing lows two years back, and are now creeping up. People who opted for floating rates were the most affected while those who stayed anchored at their fixed interest rates were glad they did it.
Soaring oil prices around the world, liquidity and other economic upheavals add up to the inflationary pressure in the economy. It is up to the apex bank to rein in and contain such inflationary strains. Reverse Repo Rate (RRR) is the rate at which banks park their surplus with the Reserve bank of India (RBI). When RBI decides on any change in the Reverse Repo Rate, it indirectly affects the benchmark Prime Lending Rate (PLR) of your bank. Consequently, the interest rate could move up or down. So where is it set to now? It is believed that, at least for now, rates are bound northwards .

With retail lending rates going up, banks have come up with myriad schemes to make home loans still look attractive. Here are a few:
Absolutely free accidental death cover packaged with your home loan! Sounds incredible. Banks that offer it relieve the family of the burden of EMI payments, in case of accidental death of the breadwinner
Waiver of penalty on Part Pre Payment of loan. With this clause neatly set into your home loan agreement, you'll not be charged extra money or penalty for partly pre paying the loan. In this case you can opt to either reduce the tenure or down the EMI
Balance transfer to avail a cheaper loan on the outstanding amount. Absolutely no processing or other hidden fees for lower interest rate
No prepayment penalty

Hybrid home loan that provides customers with a choice of splitting up the loan requirement into adjustable and fixed rate loans. The amount locked under fixed rate hedges the interest rate risk against rising interest rates to that extent. The amount locked under floating rate can benefit from falling rates. A novel scheme that to some extent provides a solution to borrowers debating if fixed is better or floating
Most HFCs finance only 80 per cent of the property while you put in the remaining as down payment. Some banks promise loan on 100 per cent of some select properties
Negotiable and competitive interest rates
Unique schemes to help to repay faster - decreasing tenure, increase EMI, part pre payment - all at no additional fees If you can keep aside some portion of your income towards monthly installments, it is wise to invest in a house.

Looking at a slightly different perspective, given the long tenure of loan (say 15 to 20 years), inflation is bound to make your monthly repayments appear like peanuts in the longer run. Further, you enjoy the luxury of your own roof right from day one.
Adding to this is the time-proven trend of real estate appreciating over the years. Even if you assume you cannot afford the monthly installments , you can sell the property to another buyer for a higher price. So if you haven't still joined the bandwagon of home loan borrowers, it is not too late.