Rohan MathawanA home is more like a feeling than just four walls of brick. It is a sense of security that you have a roof above your head. However, owning a home today is a luxury, considering the skyrocketing real estate rates. Not everyone can afford to own a house all by themselves as it is probably the biggest financial transaction in an average person’s life. A home loan is a great option to buy a home without affecting your savings drastically.
Many people wonder if a home loan is a better way to go or to use all their savings to buy a home. Suppose you buy a home with all your lifelong savings, what will you do in case of an emergency? Will you be able to gather funds after spending savings to buy a home? It is why a home loan is a much better option.
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Let us look at the many benefits a home loan offers:
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Sense of Accomplishment
There is no denying that buying a home is one of the most significant financial investments you can make. Especially for the middle-class, it can take a lifetime to afford a home of their own. However, with the help of a home loan, you can buy a house in much lesser time and ease. You will not have to wait for years to have a place of your own with the availability of home loans.
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Credit History Improvement
Even if you have enough funds of your own, a home loan can be a much better option. Having a good credit history is necessary irrespective of your financial condition. By repaying a home loan, you can build a credit history over time by making timely payments to your lender in the form of an improved credit score.
If you keep paying your monthly/yearly installments on time, your credit score will keep increasing. The timely repayments show lenders that you’re a financially responsible person.
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Capital Appreciation
No matter what the price of your property is today, it will cost a lot more in the coming years. If you buy a house through a home loan and pay off the mortgage, your property may be worth more than the whole amount. This way, your savings remain intact, and you are also safe from the inevitable inflation in the future.
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Emergency Fund
If you take a home loan, you do not have to spend all your savings. Instead, you can keep them as an emergency fund. It enables you to live stress-free in your own home as you know you have funds set aside for times of crisis. It is wise not to spend all your savings in one investment. You just have to, fix monthly budgets to pay back the home loan amount and ensure that it is paid on time.
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Tax Benefits
They are two kinds of tax benefits available on a home loan – one is on the repayment of the principal amount, and the other is based on interest payment. Principal repayment allows you to avail of deductions on the payment of the actual borrowing amount under Section 80C of the Income Tax Act. The deduction cannot exceed Rs. 1.5 lakhs in a financial year.
Interest payment allows you an interest deduction on the amount you’ve borrowed to purchase/construct a property under Section 24(b).
The Bottom Line
Why wait a lifetime when you can own a house at a young age itself? A home loan is a convenient way to homeownership as it allows you to make repayments at affordable interest rates and according to your repayment capacity. USDA loan program offers competitively low interest rates on home loans. Check usda map if you are an eligible borrower so you can receive an advantageous rater compared to other loan programs.
Reputable banks like Axis Bank offer home loans at attractive interest rates. You can choose between fixed or floating home loan interest rates as per your preference. Make sure to use a home loan eligibility calculator based on your requirements to get an estimate of the EMIs and plan the repayment accordingly.