Is availing a home loan advantageous? Know how-

Is availing a home loan advantageous? Know how-

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Having your own home is a dream for all and this can be easily fulfilled by taking a home loan. Although availing a home loan isn’t a cake walk but once you are through the process, it can give you several benefits. Read on to know the few benefits of choosing a home loan for buying a house.

A home loan is taken to purchase a house and the construction of the home must be completed within 5 years from the financial year when the loan is availed. You can avail tax benefits under two components- one is on the interest amount that is paid and the other is on the principal amount.

Tax benefits on principal amount– The principal amount paid during a year as EMI is tax deductible under the Section 80C. The maximum amount that can be claimed for taxes is 1.5Lakh however on the condition that the property cannot be sold within 5 years of getting the possession.

Tax benefits on the interest paid– Under section 24C one can claim a deduction of up to a maximum of 2 Lakh towards the interest portion of the EMI paid. The deduction can be availed only from the year when the construction of the house is complete.

Investment in an appreciating asset- Buying a home is one the smartest investment as the value of the property appreciates in the long term. Given the fact that one-third of the population is young and will soon aspire to have their own homes, the property value will appreciate significantly.

More liquid funds– In case if have enough fund to buy your home, it is still not advisable to go for a home without a home loan. Investing the entire money in purchasing the home will affect your emergency fund and you may not be able to liquidate the fund easily in case if an emergency pops up. Taking a home loan will help you to have more liquid cash and diversify your investment with the surplus cash.

Build a good credit score– Repaying your home loans with the EMIs are the best way to build a good credit score. If you have paid your EMI’s regularly you can build a good credit score and avail further loans easily like- child education loan, car loan or further loans for getting a second home.

Lower interest rates- The interest rate for home loans in India is very low thereby giving a chance to build an asset at the lowest debt. This is one of the biggest benefits as the value of the property keeps appreciating in the long term which will eventually cover the principal amount paid towards the loan along with the interest. Apart from just covering the amount towards getting the loan, it becomes the part of investment that can give high returns.

Finally having a house of your own not just helps you achieve the biggest financial investment of lifetime. The amount that we all sink in to build our home becomes the largest part of our investment portfolio.

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