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Interest Only Mortgages vs. Regular Mortgages

Mortgage finance is one of the most popular options available for average home buyers. There are a variety of mortgage options and each caters to specific requirements of borrowers and their paying capacity. While borrowers can negotiate the terms and conditions of mortgage to be availed of by them, it is always a good idea to do homework well before initiating steps to negotiate the mortgage loan with mortgage lenders and mortgage brokers.

Interest only mortgage is one of the better options available to borrowers who want to make small payments during the initial stages of mortgages availed of by them. Here the borrowers have to pay only the interest portion on the mortgage. As the initial repayments are considerable lower, borrowers can manage their finances in an effective manner. The interest only payment period usually lasts for about 5-10 years; depending upon the option chosen by you. You can also decide to pay more than only the interest portion during the initial duration of your mortgage, if you like.
Regular mortgages on the other hand, involve paying equated monthly amount where part of principal amount along with interest is paid every month.

While the interest mortgage option looks great on the face of it, you need to consider the option carefully. This is because though the initial amount payable is less, once the interest only period is over, your installment increases tremendously. Thus unless you have planed your finances carefully, whereby you can raise enough finances later on during the mortgage period, you may feel the pinch. Thus while the interest only mortgage may allow you the option to buy a relatively larger home, you need to be aware of the fact that later on, you may need to pay a larger amount towards principal repayment during the mortgage period.
Most interest only mortgage lenders offer adjustable rates, which mean that in case of rising interest rate regime, your monthly installment amount may rise considerably or alternatively your repayment period may be enhanced depending upon the rise in mortgage rate. Secondly the mortgage option can be considered a good option only when your income is expected to rise during later period of your mortgage period, when your principal amount starts getting repaid.

An interest only mortgage loan can allow you to purchase a much bigger and lavish home on account of the low initial payments. However it is always advisable to set aside a small amount towards the principal repayment as your monthly installment may shoot up considerably immediately after the interest only period is over and you may have to face the reality of rising monthly payments.

The best option before going for an interest only mortgage is to evaluate the financial needs and requirements compared to expected cash inflows in future

Investment in Real Estate Market in India

With the growth in Indian economy, particularly investment in real estate sector is becoming a strong choice for domestic and international investors. With the boost up in the prices of real estate market, it has turned out to be appealing investment in this sector as compared to investment in capital, debt or bullion market. This industry is attracting investors with several possibilities of stable source of income, tax benefits, reasonable capital appreciation and higher security.
According to a survey carried out by FICCI (Federation of Indian Chambers of Commerce and Industry), in next few years real estate market in India is going to emerge as the most preferred investment option for investment firms and realty giants worldwide. The tremendous potential of property market in India has contributed at large in the overall economy of India. The investment has merely has shaped the new skyline of Indian cities with segments ranging from residential, commercial, industrial, retail, healthcare, hospitality and lot more.

In addition to the expanding real estate sector, government of India is also promoting this sector with benefits of Special Economic Zone (SEZ). The real estate developers are taking maximum benefit out of SEZ as the expansion to their business. Several additional SEZs benefits are expected to offer momentum to the development of commercial offices in specific area where land is comparatively cheaper. Here the SEZ developer is also benefitted with great tax exemption.
The liberalization and economic reforms programs of Indian Government encourages industrial policies with reduced industrial licensing requirements, removal of restrictions on expansion and investment, easy access to foreign technology and FDI. All these FDI liberal policies will give direct positive impact real estate scenario in India. It is not surprising that foreign investors have entered India largely with joint ventures. Maximum growth has been contributed by the flourishing IT and ITES sector with 70% of estimated new construction especially for IT sector.

More investment in commercial, industrial and retail sector means more jobs and more jobs means more workforces. This will bring huge demand and supply in housing. The size of family will be reduced day by day finding housing options for them.