What are the Benefits of Availing of a Home Loan?

Buying a house can be a huge financial decision that should be taken after carefully considering various factors. Homebuyers can obtain Home Loans to meet this requirement. Along with home financing, a Home Loan comes with several other benefits including tax exemptions.

Benefits of a Home Loan

Before one decides to buy a house, they have two ways to go about it – paying with one’s saved-up cash or through a Home Loan. Here is a look at the various benefits of a housing loan vs cash payment that may make the former a viable financial choice:

Tax Exemptions on Home Loans 

There are considerable tax savings attached to house purchases initiated through Home Loans. Section 24 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 his/her 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. Every time you repay the loan EMIs by the due date, your credit score goes up. This works in your favour when you need to secure a loan in the future or apply for other forms of credit.     

No Lock-in of Funds 

Since property buying is a big investment, it requires you to set aside significant sums of money. Instead of allocating a lump sum amount for the house at once, you can avail of a Home Loan. If feasible, you can extend a large down payment and pay off the loan principal with bigger EMI payouts. This way, you may save on high interest rates or loan tenors.

Broader Property Options 

When you pay money upfront, you may have to stick to a budget, which could restrict your real estate choices. A Home Loan allows you to go over the budget without compromising on your property options. As a result, you can search for a bigger house in upscale localities that might potentially fetch you higher returns in the near future.   

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 the debt burden. Regardless, weigh the advantages of a Home Loan with that of an upfront cash payment for informed decision-making. And, 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 Calculator that will enable you to check the monthly EMIs and the complete repayment schedule in a matter of minutes.