Every person dreams of buying their own home and it is one biggest financial investment in your lifetime. On top of this, if you have a plan of applying for the home loan, then this becomes more challenging. What is a home loan? It is a type of loan extended to a person to fulfill their desire to buy their own home. For a middle-class income earner, getting a housing loan will become a huge liability since it extends for years. A person can take a home loan for not just buying their property but also for the renovation or construction of their house. Some people suggest to go for credit loans as alternative because of some benefits. So it’s up to the person to know their needs and go for it accordingly.
Before going ahead with the process of loan and repay the amount, you need to assess and review your finances and decide if you can afford a home loan or not. But, there are a lot of benefits of taking a home loan, let us check them out in detail:
1. Capital Growth
Over the past, some years, the real estate industry has been on a tremendous rise. The experts recommend that properties capital appreciation has been higher compared to the interest you are paying on a home loan. For instance, if you avail of a home loan at the rate of 10% and if the property value increases by 20% by an end of your loan period, then capital appreciation can be much higher than the interest you are paying. This appreciation of capital can help you to take care of any expenses and still get profit on your property sale.
Today home loans are highly affordable with interest rates going downward in a slope. The lower interest rate means lower EMI amounts that make the home loans quite attractive & affordable for an average income earner. One amazing benefit of taking a home loan is you become the owner of a home today and do not have to wait and accumulate enough capital to make the home purchase. Also, your loan repayment tenure will extend over 30 years depending upon the loan eligibility and various other norms (the longer your tenure, the lower will be the EMI amount). It gives you a bit of comfort in repayment without putting much pressure on the finances.
3. Tax Saving
To encourage the customers to buy their home, the government offers a tax deduction on its principal and interest paid over the loan. This deduction under the income tax starts just after the home is constructed fully. The customer cannot claim the tax deductions when the property is in the construction stage. So, this deduction under the income tax will be available only after the construction of the home is done completely. You cannot claim tax deductions when your property is in construction.
4. No worry of Rents
The cost of the real estate is skyrocketing, and rents offered to the customer goes up that doesn’t make it the most viable choice since it begins affecting a person’s monthly budget. Thus, it is always good to make the right payments through EMIs & own a house.
5. Improves your Loan eligibility
After availing the loan, and when you continue repaying its amount diligently or you have repaid your loan in full, then your credit score will increase automatically, and lenders can classify you as a safe & responsible borrower. It can help you to improve loan eligibility. You may use it to your advantage & avail loan at the affordable rate of interest.
6. Buy your Home with your Funds
You will not find an answer to the “own funds or home loan” dilemma. When taking your funding option for buying your dream home can be one good step if you are sure it will not impact your important financial objectives and you would be left with sufficient even after making its payment. It can be a viable choice even for people who will feel uncomfortable to handle the long-term debt.
For a lot of people buying a house with personal funding is not possible, so home loan allows buyers to repay their loan amount in simple monthly installments and makes buying a home a feasible option. So, if you are looking to buy a home, make sure you speak to your lender.