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Interest Rates & loan amounts.

Last updated: November 12 2008
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  • Interest Rates & loan amounts.

    What are the current interest rates offered by different banks?

    Floating as well as Fixed.. ? from which bank.?

    I am a newbie and just wanted to see how much does it take to invest in a house?

    In mumbai it doesn't seem like you can get a 2b house less than 80 lacs at a decent place. frm goregaon or thane to south mumbai.

    So if someone has to take a loan... what is the maximum percentage of loan he can take? 80% or 90%? with the downpayment being 10% or 20%

    are there any calculators available online, where I can enter like cost of house or cost of sq ft and total sq ft of a house and it gives me a result what can be my minimum down payment and maximum loan %?

    if someone can give me the values I can create an online calculator everyone can use.

    Btw. i am not in India so I have no clue about the current rates.
  • #2

    #2

    Re : Interest Rates & loan amounts.

    At these prices you are not investing. You are ********!

    Dear Varun,

    Can you tell me of a bank giving 1 Cr loan?

    First of all, Rs 1 Crore as a price for a 2/3 BHK home in far away South Chennai SCARES ME!!!

    Second, can anyone tell me of a bank which actually gives loans to people for a one crore flat? I believe they are now asking for 25% - 40% down payment. How many people out there now are willing to put up 40 lakhs down for a mere flat.

    Even assuming a 80 lakh loan is available, at current rates of 11% or so, who is capable of paying around 82500 pm which is after taxes (which is likely to be 30% at that salary bracket) (forget the tax break of 1.5 lakhs, that is so trivial at these levels of calculation)? This means you must be earning a gross salary of around 1.2 lakhs just to cater to this payment!!! To be doing that you must AT LEAST be earning a salary of say 2 lakhs per annum gross and even then you will just break even (and I'm not bringing in Maintenance Cost which could break your back). How many of you are doing that? And more importantly, expect to be doing that in the next few years given that deflation and competition will most likely take such jobs away from India largely.

    Do you see why prices HAVE to crash? Who is earning 2 lakhs pm gross in enough numbers to afford these flats in large numbers. I anticipate crash from 50% to as much as 80% when the global deflation runs through our economy as well. When this deflation is finished, people who had 3 lakhs salary will be happy with a 75000 salary, mark my words!!!

    At these levels guys, you can be cleaned out for life if you are not careful. All it takes is this. Price declines 25% - 30% in next 1 year (and your loan is underwater). And your salary comes down from 2 lakhs to 1.25 lakhs (so very easy). You lose the home. And you lose the 20-30 lakhs down payment (which you took maybe 8-10 years to build up). With that kind of stress you might even lose your job (due to distraction)!!!

    And THAT is a GAMBLE you can ill-afford!

    cheers

    Comment

    • #3

      #3

      Re : Interest Rates & loan amounts.

      Originally posted by wiseman View Post
      Dear Varun,

      Can you tell me of a bank giving 1 Cr loan?

      First of all, Rs 1 Crore as a price for a 2/3 BHK home in far away South Chennai SCARES ME!!!

      Second, can anyone tell me of a bank which actually gives loans to people for a one crore flat? I believe they are now asking for 25% - 40% down payment. How many people out there now are willing to put up 40 lakhs down for a mere flat.

      Even assuming a 80 lakh loan is available, at current rates of 11% or so, who is capable of paying around 82500 pm which is after taxes (which is likely to be 30% at that salary bracket) (forget the tax break of 1.5 lakhs, that is so trivial at these levels of calculation)? This means you must be earning a gross salary of around 1.2 lakhs just to cater to this payment!!! To be doing that you must AT LEAST be earning a salary of say 2 lakhs per annum gross and even then you will just break even (and I'm not bringing in Maintenance Cost which could break your back). How many of you are doing that? And more importantly, expect to be doing that in the next few years given that deflation and competition will most likely take such jobs away from India largely.

      Do you see why prices HAVE to crash? Who is earning 2 lakhs pm gross in enough numbers to afford these flats in large numbers. I anticipate crash from 50% to as much as 80% when the global deflation runs through our economy as well. When this deflation is finished, people who had 3 lakhs salary will be happy with a 75000 salary, mark my words!!!

      At these levels guys, you can be cleaned out for life if you are not careful. All it takes is this. Price declines 25% - 30% in next 1 year (and your loan is underwater). And your salary comes down from 2 lakhs to 1.25 lakhs (so very easy). You lose the home. And you lose the 20-30 lakhs down payment (which you took maybe 8-10 years to build up). With that kind of stress you might even lose your job (due to distraction)!!!

      And THAT is a GAMBLE you can ill-afford!

      cheers
      Excellent analysis Wiseman!
      I am an IT Consultant working in US. I am planning to Invest in hyderabad sometime in the future (I will wait till the current market stabilizes/I get an excellent deal). I am targetting plots which are 2500-3500 per sq. yard ( I am looking for locations away from city and have good growth prospect). Please let me know your thoughts?

      Comment

      • #4

        #4

        Re : Interest Rates & loan amounts.

        sure feels like there is a lot we can learn from wiseman..

        keep it comin ... wise

        Comment

        • #5

          #5

          Re : Interest Rates & loan amounts.

          Wiseman is really a wise man. He has got a lot of data and informations, possibly due to his long experience in the RE field and he shares them to others benefit. However, he still believes that RE prices in Chennai will come down very drastically, even by over 50 %, is only not convincing to me.
          Last edited by ks2071746; November 13 2008, 11:14 AM. Reason: spelling mistakes

          Comment

          • #6

            #6

            Re : Interest Rates & loan amounts.

            Can you help me please?

            Dear Readers,

            I have found something puzzling for a long time now. And I would like people to help me with personal data to clear this doubt. This is the doubt:

            I hear a lot of talk about 2/3 BHK flats going for 95 lakhs to 1.25 crores in outlying areas. Can anyone tell me if they have personally taken (or seen someone in their friend's circle take) such loans? What has been their experience in paying it back. Is it bought with the hope that prices will perenially rise and salaries will perenially rose and jobs will be available in plenty?

            Note
            When we are single (or married with a double income BUT no kids), we seem to have all the money in the world. And if this happens like in the boom times of the last 5 years, it creates even more euphoria. This gives people a false sense of being wealthy - called the positive wealth effect!

            BEWARE! As the mighty banks and hedge funds in the West have realised, when the piper stops playing and the dance comes to an end, the negative wealth effect comes into play and can create poverty for a long time to come. And when kids come into your life the costs mount up rapidly and for a long time.

            But can you please give me some information (only if you don't mind) on your experiences with humongous loans?

            cheers

            Comment

            • #7

              #7

              Re : Interest Rates & loan amounts.

              Personally, I have seen salaries spike 3 folds in the last 4 years (In IT industry). And I haven't seen salary of people go low anytime? There would be a percentage of people who would loose their job. But salaries being cut off is something I havent heard till date. So people are probably expecting to grow in the same percentage, which might never happen.

              NRI's: in the last couple of years there have been a lot of people travelling to US. They would earn save around 10-15 lacs a year. With the current prices in India going up, they feel that it is normal since it is fitting in their budget. But what they don't realise is the Visa, they will have to come back after a certain period of time and will not get the same salary they recieved in US.

              10 lac down payment for a 50 lac house with an EMI of 50 K is affordable if you are in US and if you have been in US more than a year you can afford more. But, no one is expecting a down turn where they would be laid off or visa is not valid and they will have to go back to india. Where it might be impossible to sustain with an EMI of 50 K.

              well, in any case I feel the current prices are ridiculous and if anyone has bought a place costing 50 lac - 1 cr in last one year based on the above scenario.. would be in trouble.

              Having a 60-70% downpayment for a aparment costing 50 lac would be more meaningful.

              Comment

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