5 Advantages of Home Loan
Published: June 23, 2022
Buying a home is one of the biggest decisions in an individual’s life. We all dream of owning a house someday. It gives us a sense of security and it also makes us feel like we have accomplished something in our life. However, buying a house is no easy feat in today’s economy. That is where home loans come to our aid.
What are the benefits of taking a home loan?
The decision of buying a home can be a bit challenging. Thankfully, there are home loans in India that offer several benefits. A means to building an appreciating asset, here are some of the advantages of a home loan:
No Lock-in of Funds
It is recommended that you take a home loan in case you are planning to buy a property. That’s because in case of an emergency, you might need huge amounts of money and if you invest all your money into buying a house, then you might get caught in a difficult situation. This is the reason why it is a good idea to take a home loan when buying a house. This way, you can plan better financially and have funds at your disposal in case of an emergency. This is one of the biggest advantages of housing finance.
Improves Credit Score
Home loans can also help you to improve your credit score which, in turn, improves your chances of getting loans in the future. When you apply for a home loan and as you continue to make payments towards your EMIs, it automatically improves your credit score as well. You will get instant loan approval if you are planning to buy a car or apply for student loans in the future.
Under section 24 of the Income Tax Act (ITA), homeowners can claim a deduction up to a maximum of Rs. 2 Lakhs on their home loan interest for a self-occupied property. Apart from this, under section 80C of said act, one can also claim a deduction of Rs. 1,50,000/- on principal repaid. Hence, home loans not only help you to buy a house but also offer tax benefits.
Low Interest Rates
When compared to other loan types, the rate of interest is quite low on home loans, primarily because it is secured against an asset. A home loan is the best way to pay for your house in the long term; it can significantly reduce the financial burden. Moreover, there are several options available when it comes to availing low interest rate home loan for your home.
No Legal Issues
When you apply for a home loan, the lender conducts thorough research of the property to check if there are any legal issues. The lender will also ensure that you don’t face any legal issues pertaining to the paperwork of the property. Furthermore, home loans can also give you a sense of security, something that is very important when you are planning to buy a house.