Banks are liberally lending to young borrowers with long tenures

Banks are now willing to offer home loans to borrowers who are younger in age at early stages of their lives and careers for a long tenure. Earlier these long tenure loans were considered as high risk factor by the banks but the notions and outlooks have changed today. The loans are offered by the banks to the young professionals according to their expectations and needs of the size of property and locality. The banks are open to offer home loans to prospective borrowers for even thirty years or so for the ones borrowing for the first time. This is a certainly a good news to the prospective home buyers and the young borrowers.

Builders tie ups with Bank 

This has been decided by the banks after the successive repo rate reduction by the RBI and the government measures to remove the road blocks of the borrowers. The experts opine that this step by the banks will certainly help the consumers, end-users and investors as well as the developers. This will also help in increasing the demand of the properties in Bangalore which will in turn help in the reduction of unsold inventories. Simultaneously this will assist the prospective property purchasers in financing a substantial part of the cost of the new home. 

 After the reduction of the repo rates by the central bank the interest rate on the loans also have been reduced. It is said that the banks have reduced the interest rate to half the amount that’s being reduced by the RBI. The attempt is to push the demand for the credit to insist the buyer to make the purchase decision. Earlier it was believed that any tenure beyond twenty years was considered a high risk factor by the banks. The reasons are many. The borrower may not survive and so many things can happen and the apprehension was that any tenure beyond twenty years would diminish the ability of the borrower to repay.

But the days have changed drastically with the young buyers having high salary levels and high prospects in life. In these circumstances it is believed that the ability of repayment of the customer is more compared to the by gone times. The economists and financial planners want the credit to be pushed due to which the cost of credit has been reduced. Taking a loan capital to build houses and buy houses and apartments are no longer considered as bad or risky. The youngsters today also are willing to take higher loan amounts from banks for a longer tenure. The banks have also simultaneously changed their strategies to cater to this demand of the young population and are offering higher loan amounts for longer periods than before. But these longer tenure loans are generally offered to buyers with higher value of property. The property value for these long tenure loans are normally more than one crore of rupees. The banks have started to offer longer periods to these buyers with the assumption that their repayment ability will increase as they grow. These borrowers are normally in the age group of 25 to 30 years. The banks argue that young borrowers are not usually given higher loan amounts as their salary levels are usually low. Usually the young buyers were restricted to get higher loan amounts and this limited them in buying higher value properties as their potential to pay the EMIs were less. In contrast the banks have now changed the strategy to disburse higher loan amounts to young buyers with even lesser income but on a longer tenure, generally for 25 to 30 years.  Visit to know what to check before buying a house.

The builders have also started taking this opportunity to capitalize on this and increase their sales. In that, the banks have tied up with the builders for mutual interest. This is also a fact that unsold inventory is more in the price range of Rs. 75 lakhs to more than a crore. And these long tenure loans are generally for the flats and apartments which are higher in price. This makes a win-win situation for the banks as well as the builders and as the young generations are given to enjoy larger flats than what their financial conditions permit, they are also happy. Not only in the high priced sector, the tie ups with the banks are also a case for the affordable sector as well. There are builders in Bangalore selling flats, apartments, land plots and layouts who have tie ups with the major banks. Normally, the banks approve few projects and they financially help the developer in constructing the buildings and the projects. This is also true that the builders also become a sort of an agent of the banks and help them in their money lending business. In this the builders approach the banks on behalf of the customers and ask for the loans provided the papers and requisites are met by the buyer. One can approach one such builder who is in search of affordable, luxury or high priced flats and the builder would assist them in procuring the home loan as well. But in spite of all the changes of the market strategies, this still remains a fact that if you are a borrower, the younger you are, the better it is.