Importance of Investing in Owning a House During COVID-19 Pandemic Situation

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Worldwide, the COVID-19 pandemic changed the way of living, working, means of interaction and socialization, and investments as well. Thinking of people has changed when it comes to investment. During these changing trends, new age investors are inclining towards owning a property, the reason behind this is the residential sector is all set, to begin with, a steeply rising curve.

According to a survey conducted during the pandemic, below is the outcome.

  • 48% of respondents prefer to buy the residential real-estate.
  • 25% of the total participants preferred to invest in the stock market.
  • 18% expresses the interest in investment of yellow metal.
  • Only 9% were in favor of the traditional investment method i.e. fixed deposit.

The reasons come out from the survey are:

  • The majority of the participants were interested in real-estate because at this moment one can negotiate the price and the second thing is, loans are available on lower interest rates.
  • The instability in the stock market from the last couple of months, causes a decline in investors’ interest towards it
  •  The all-time high gold prices have also made the investors less interested in it but for some, the gold is always a preference. These are counted as 18% of the total respondents.
  • Due to depleting interest rates of FDs make them the least favorable choice for investors.

Opportunity knocks the door once in a while, and when it does, it should be optimally utilized. In the recent scenario, people are realizing the importance of residential real estate as an asset in their investment basket. It is well taught by this pandemic that it is far better, owning an apartment than rented accommodation while jobs are at high risk. Additionally, another factor that makes the residential real-estate a better and reliable investment option is the steady returns when compared to the highly unpredicted stock market.

The decision made by the Reserve bank of India to cut the repo rate by 40 basis points (bps), made the home loans considerably attractive. The opportunity given by the Indian central bank is not to be ignored by the potential buyer. This cut in repo rate brings the home loan interest rate at their lowest that varies from 7.2% to 8.5%, either offered by public or private banks.

Here is the mathematical calculation:

  • A rough calculation of Rs. 50 Lacs home loan for 25 years at an interest rate of 8.5% and 7.75%, the monthly EMI will be Rs. 40267 and Rs. 37767 respectively.
  • The decreased interest rate will result in saving of Rs. 2498 on monthly basis.
  • Further, under various sections of the Income Tax Act due to which by gaining the benefits on interest payment the borrower can save additional Rs. 3241 on a monthly basis or Rs. 38892 on an annual basis.
  • Now the effective equated monthly installment comes down to Rs. 34528 (including tax benefit) and simultaneously the effective interest rate will be coming down to 6.74%. It is the lowest interest rate offered on home loans.
  • Another benefit, the borrower can be availed during this period is that option of a fixed interest rate can be availed rather than choosing the floating one.
  • Since in later days, the monetary policies can be changed by the Indian central bank and these lower interest rates can be hiked.

Conclusively, if someone is looking to acquire and investing in real estate this is the right time. Since both seller and lender offers you the attractive deals. The deal made during this period will beat inflation as well. Thus, it will be a win-win situation in all aspects. Come forward, grab the opportunity and fulfill your dreams in view of securing the future.

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