Building home is an important part of anyone’s life. Even a person’s career goals are indirectly aimed at some of the long-term objectives like a permanent healthy income, decent standard of life and also owning a house. In addition, investment in buildings has become a hot area for business investors. Therefore, may it be for domestic or business purpose home loans are a very helpful financial assistance. This makes home finance a prominent area to study while looking up for investments in day-to-day life. Here we look upon the topic of countrywide home finance because the rates in various areas of the country would vary based on the local state regulations and norms.
First is to decide when to purchase a home. This would include an internal and external analysis. An internal analysis would be to first check on the stage of the financial life cycle you are in. There are mainly five stages in the finance life cycle happening during your lifetime. A) parent depending- where income level is very low B) young single- where income level is lesser than the expenditure C) Young couples without children when the income is more than the expenditure D) with children E) Retirees. Therefore, out of these the third stage would be more apt to buy a house. An external analysis would include analysis of the market rates and the real estate value.
Home loans can be of various types. A) Variable rate loans whose interest rates vary with that of the cash rate fixed by the central bank of the particular country B) capped rate loans –which have a ceiling rate above which the rates cannot be increased. C) Low doc or no doc – who come with no document requirements, aimed at self-employed people D) fixed rate loans E) no deposit home loans F) combination or split loans. Therefore, this provides the loan seeker to select from the above-mentioned categories of loans from which he or she can choose according to their requirements.
Seeing from the bank’s perspective home loans should be given with a lot of caution. It should be remembered that such a type of miscalculation by the banks only led to the subprime crisis, which has caught the world under a dark shroud, called recession. Therefore, banks should make a proper analysis of the financial status of the people whom they provide finance to.