Should You Get a Home Loan Even If You Have the Money to Buy a House?

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3 min 30 Jan 2024

Getting a Home Loan Even If You Have the Money to Buy a House

Highlights:

Benefits of Home Loans on Your Credit Profile
Know How Home Loans Help You Save Tax

Aspiring homebuyers often avail of a Home Loan to purchase their dream home. A Home Loan comes with several benefits, such as a substantial loan amount, competitive interest rate, and flexible repayment tenor. Read on to learn a few benefits of availing of a Home Loan.

Benefits of a Home Loan

When one decides to buy a house, they can either utilise their savings, if that is an option, or avail of a Home Loan to finance their purchase. Following are some of the benefits of availing of a Home Loan:

Helps Save on Taxes

Under the Old Tax Regime of the Income Tax Act of 1961, Home Loan borrowers can benefit from tax deductions. Section 24(b) of the Income Tax Act allows borrowers to claim deductions up to Rs.2 Lakh on their Home Loan interest, provided the property is self-owned and used as a residence by the owner or their family members.

Also Read: Know All About Top-up Loans and How to Avail of Tax Benefits

Improves Your Credit Profile

A Home Loan can prove beneficial in improving your credit score. When you repay your loan EMIs regularly, your credit score increases over time. This also helps you secure favourable loan terms in the future.

No Lock-in of Funds

Since buying a property can be a sizeable investment, it requires you to set aside a significant sum of funds. Instead of allocating a lumpsum for a one-time payment, you can avail of a Home Loan. Depending on your preference and the availability of funds, you can decide how much to cover in down payment. This way, you can choose to decide the extent of debt you would like to avail of.

Home Loans are among the most convenient and cost-effective forms of debt. Most lending institutions extend attractive offers periodically with customised repayment terms to ease debt repayment. Regardless, weigh the advantages of a Home Loan with that of an upfront cash payment for informed decision-making.

If you need Home Loans to buy a house, compare the different loan schemes in the market to aid your selection. You can also get a clear overview of your expected loan through an online Home Loan EMI Calculator, which will enable you to check the monthly EMIs and the complete repayment schedule in a matter of minutes.

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