Home loans are becoming cheaper as PM Modi does another master strike

New Delhi: The home loan queries with the State Bank of India (SBI) jumped three times since it slashed lending rate by up to 0.90 percent last Sunday, a top bank official said on Saturday.The home loan queries with the State Bank of India (SBI) jumped three times since it slashed lending rate by up to 0.90 percent last Sunday, a top bank official said on Saturday. Since the bank reduced marginal cost of funds based lending rate (MCLR) by 0.9 per cent from 8.90 per cent to 8 per cent, it received large number of enquiries, especially for home loans.

With the new year ushering in cheaper home loans, we study the ArthaYantra Buy Vs Rent Report 2017 that looks at 12 cities across India to map where buying is affordable and where living on rent is more cost-effective.

How rents compare with property prices?

Home loans are becoming cheaper: Should you buy or rent a house?
The key parameter in determining whether to buy or rent a home is property cost vis-à-vis rental value.

Assumptions
1. Sale price and rentals are for a ready-to-occupy 1,000 sq ft property.
2. Baseline gross annual income considered is Rs 8 lakh.
3. 20% of the cost of the house is considered down payment.
4. Home loan tenure considered is 15 years, at an interest rate of 9.25% per annum.
5. Average savings to buy a home is considered 25% of one’s annual income.
6. 50% of monthly take home salary is considered as EMI payable.
7. 1.5% of the property value is payable as property tax.
8. Rental security deposit varies city to city.

Home loans are becoming cheaper: Should you buy or rent a house?

The Arthayantra Buy Vs Rent Score

Home loans are becoming cheaper: Should you buy or rent a house?
The score determines the pros and cons of buying or renting a property in every city.

How many sq ft will Rs 1 lakh buy?

Home loans are becoming cheaper: Should you buy or rent a house?
Buying a house is a big financial decision, and the buyer should ensure he gets the best value for money.

Prices, rents have changed over the year
While property prices and rentals have fallen in Delhi, Hyderabad, Chennai and Pune have witnessed a rise in both.

What you should do if you are in

Home loans are becoming cheaper: Should you buy or rent a house?

Bengaluru
Though property prices and rents have fallen, it makes more sense to rent for households with annual incomes of up to Rs 12 lakh.

Chennai
It is the third most expensive city to buy a house in. For those with an annual income of up to Rs 16 lakh, renting is recommended.

Delhi-NCR
The second most expensive location to buy or rent a house. Renting is recommended for households with an annual income of up to Rs 16 lakh.

Hyderabad
If you consider the EMI vs. rent ratio, it is the best destination for buying a house in.

Kolkata
An affordable city to rent or buy in. Those with an annual income over Rs 15 lakh can buy a house.

Pune
Prices are comparable to those of Bangalore. Households with an annual income of up to Rs 14 lakh should rent a house.

Pune
Prices are comparable to those of Bangalore. Households with an annual income of up to Rs 14 lakh should rent a house.

Ahmedabad
An affordable property market. Those earning less than Rs 8 lakh a year should rent.

Indore
The most affordable city to buy or rent a house in. Anyone earning more than Rs 8 lakh a year can afford to buy a house.

Kochi
Costliest among the new entries. Households with income of up to Rs 8 lakh should choose to rent a house instead of buying.

Lucknow
As rents are low, those earning less than Rs 8 lakh a year should take homes on rent.

Jaipur
Another city with low rents. Households earning up to Rs 8 lakh a year would be better off renting a house.