There is nothing more ideal than being able to buy a home of one’s choice in Mumbai while staying well within one’s budget. Various parts of the city have different types of homes that may appeal to one’s interests as well as budget.
However, in a metropolitan city, financing planning for buying a house may be insufficient if people are only thinking about savings and investments. This is the time to consider other types of housing finance.
Five Types of Housing Finance Options in Mumbai
Home Loans
This is one of the most well-known and traditional house financing options available in Mumbai if one can make a down payment for their new home. With so many housing finance firms to choose from, anyone can find a lender with a suitable interest rate.
Liquid Mutual Funds
Many people may want to plan the purchase of their home within a period. Investing in an open-ended liquid mutual fund can help them arrange their finances over a shorter investment tenure.This can be a suitable house financing option that gives an investment return in a matter of months, weeks, or even days, as these debt funds invest in short-term markets. While there are certain risks in this investment, as with any other, the returns are high and can assist with house financing in Mumbai.
Loan Against Securities
This option has not gained much popularity for house financing. However, if someone is considering it, taking a loan against one’s securities and investments, such as Demat shares, RBI Relief Bonds, mutual funds, and even life insurance, is possible. If a person is unable to arrange for a down payment for their new home, a loan of up to 80% of the value of their investment can be taken out against these securities. The interest rate can be flexible and will be determined by the lender with whom one’s life insurance company or investment company has partnered to provide the buyer with this loan facility.
Rent-To-Own
Many parts of India, especially Mumbai, have a house financing option called rent-to-own. The rent-to-own scheme is a Central Government initiative under the National Urban Rental Housing Policy (NURHP) that allows tenants to pay for and purchase the home they are living in for 1-3 years. During this time, the rent paid to the homeowner, as well as the remaining amount for completing the purchase, can be arranged by the tenant. The rent-to-own scheme can be carried out through a standard lease agreement or a lease purchase contract.
Seller Financing
Seller financing may still lag behind other types of housing finance in Mumbai; however, it is an option open to potential home buyers looking for new home financing options. Here, a buyer can purchase a home with a low potential for sale in the real estate market. If a home buyer decides to go through with this option, they can get in touch with the seller, who will become their lender, and the mortgage will be directly paid to them. No third-party financial institution or bank will be the lender here.
Three Advantages of Housing Finance
Here are the three main benefits of availing of housing finance:
Easier Way to Purchase
Instead of relying solely on savings and emergency funds to purchase a home, housing finance options allow a buyer to choose one that enables them to purchase a home within their financial capacity.
Real Estate Capital Growth
Regardless of whether the buyer’s repayment amount in terms of interest payments appears to be substantial, real estate capital appreciation is never stagnant and always provides a return on investment.
Encourages Savings and Investments
When considering various financing options, one needs to maintain steady savings and investments so that the EMIs and payments towards the purchase of the home are on track, which encourages a regular saving habit.
Ending Note
Since the real estate market and people’s home-buying preferences are developing, it is only natural that the various house financing options should also be upgraded. This can ensure that many choices are open to homebuyers who may not find traditional home loans viable options for purchasing a new home.
Buying a house can be a difficult but achievable life goal if approached thoughtfully. If someone is considering buying a flat in Mumbai, look into Piramal Realty’s luxury residential developments, which feature excellent design and cutting-edge amenities. At present, the #TheFutureStartsAtHome campaign at Piramal Realty enables a buyer to avail of a fixed-interest home loan at 6.75% p.a until 2024. Book your dream home at any of our residential projects in Mumbai.
Disclaimer- This article is based on the information publicly available for general use as well as reference links mentioned herein. We do not claim any responsibility regarding the genuineness of the same. The information provided herein does not, and is not intended to, constitute legal advice; instead, it is for general informational purposes only. We expressly disclaim/disown any liability, which may arise due to any decision taken by any person/s basis the article hereof. Readers should obtain separate advice with respect to any particular information provided herein.
Table of Contents
