Are you planning to finally buy the home of your dreams? Most homeowners opt for home loans to finance their purchase. But, is it a good idea to take a home loan? Should you buy a house when you have enough savings or rely solely on financing? Don’t worry, we’re here to help. Find out what makes home loans so popular amongst homeowners.
Should I take a home loan – the pros
- Tax benefits
Under Section 24, 80 EE and 80 C of the Income Tax Act, you can enjoy tax benefits as part of your loan. You can claim the interest amount you pay towards your home loan for deduction, up to a maximum of Rs. 2 lakhs in a financial year. You can also claim the principal portion of your EMI as deduction, up to Rs. 1.5 lakh.
- Scope to improve credit score
Your credit score improves when you pay your loan EMIs on time. Thus, when you avail a loan, you have a chance to improve your creditworthiness. This will also help you take loans in the future with ease.
- More liquidity
Is a home loan good idea or should you make a huge down payment with your own savings? While you do have to make a certain down payment in the case of a loan, it isn’t wise to exhaust your savings on a house. When you take out a home loan, you preserve your financial liquidity by spreading out the financial load over a longer period of time.
Should I take a home loan – the cons
- Increased cost
When you purchase a house using a loan, you not only pay the principal amount but also the interest component. As a result, the cost of your house goes up. However, since this cost is spread out over several years, it is easier to bear it as opposed to paying a lump sum at one go.
- More paperwork
When you buy a house using a home loan, you need to submit certain documents. Some lenders ask for a lengthy list of documents and may even have a slow processing time. So, if you are not able to submit some documents on time, your purchase might be delayed. Thus, it is wise to opt for a lender with minimal documentation requirements and fast processing times.
In conclusion – is a home loan a good idea?
Yes, there is a reason that home loans are so popular with homeowners across age groups and backgrounds. They provide a convenient way to purchase the house of your dreams. Additionally, you also enjoy tax benefits on the EMIs you pay towards the loan.
At Tata Capital, we offer a wide range of home loans, starting at an interest rate of just 6.85%. We offer loan amounts starting from Rs. 5 lakhs up to Rs. 5 crores to help you build the home you’ve always wanted.
Visit our website to learn more about home loan eligibility and documents required for home loan & repayment conditions.