Boom in Real Estates leads to growth in Home Loan

The key factors on which the growth of real estate sector in India is dependent are easy finance options, ample job opportunities and availability of good properties. The availability of finance options have been made possible by easy home loans provided by the banks and financial institutions. The huge job opportunities created by the IT and IT-enabled industry India has created purchasing power in the market. These service class people avail home loans to buy properties for their own use and investment. With the availability of both finance and job opportunities the demand for properties has been shooting up. The developers are also motivated to invest and develop even more properties.

There are various kinds of home loans available which can be used to purchase property, construction, home improvement, home equity loans etc. The finance can be availed for all kinds of properties like residential, commercial, and industrial. These finance options are open for all salaried individuals, self-employed individuals, partnerships and even NRIs. There is different documentation requirement for each category of borrower. The details about the loan options are also available on the web which also has online financial calculator to assist in cumbersome calculations.

The home equity loan is a comparatively a new offering from banks, here the borrower can mortgage his existing property to avail loan which can be used for the purpose as various purposes like marriage, education or medical expenses. The equity loan amount that can be disbursed is as per the bank policies. Normally it is about 60 percent of the value of the property. A lot would depend on the credit background of the borrower. The banks are able to offer the loans at such competitive rates due to refinancing facility available from the apex body of Reserve Bank of India (RBI) or the overseas market

India's finance minister has called on banks to lower interest rates to keep Asia's third-largest economy expanding strongly amid fears aggressive monetary tightening could slow growth.

P. Chidambaram urged state-run banks to reduce lending rates by half a percentage point to spur consumption and investment as signs emerge of a slowdown in consumer spending.

"I would like... that banks cut lending and deposit rates by 50 basis points so it stimulates investment and consumption," he told reporters late Friday after meeting heads of state-run banks.

He said he wanted banks to boost lending for consumer goods at the same time as reducing loans to the housing sector, which analysts warn could overheat.