5 Benefits of Taking a Home Loan

Updated on: 17 Jan 2024 // 4 min read // Home Loans
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Buying a home is often one of the most significant financial decisions of one’s life. Not only does a home bring a high level of financial security, but also saves the homeowner from the day-to-day hassles of living in a rented dwelling. That being said, purchasing a home often needs one to seek financial assistance from a bank, in the form of a Home Loan. If you think conventionally, a loan is essentially a debt which you must steer clear from, however, a Home Loan comes with a wide array of added benefits which makes it a clever decision for you to opt for.

Let us examine some of the leading benefits that you can avail when you choose to Apply for a Home Loan:

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1. Addition to a Good Credit Mix

When it comes to maintaining a good credit score, there are a few aspects that play a major role. These include –

  • Payment History
  • Amounts Owed
  • Length of Credit History
  • New Credit Enquiries
  • A Mix of Credit Types

Considering you already have a credit card, a car loan or a personal loan under your name, applying for a Home Loan will add to your credit mix, thus resulting in a small yet significant rise in your credit score. Of course, in order to maintain this growth in your score, you must ensure that you pay your EMIs in a timely manner, unfailingly.

2. Tax Benefits

In order to enable a greater number of citizens to own and live in a home of their own, the Government of India offers various tax benefits on the repayment of the Principal as well as Interest on Home Loans. For instance, under Section 80C of the Income Tax Act of 1971, an individual can claim a deduction of up to Rs. 1.5 lakh on the Principal Amount repaid in a given financial year. Similarly, the individual is entitled to a deduction of up to Rs. 2 lakh, on the interest paid towards the Home Loan in a given financial year, under Section 24 (b) of the Income Tax Act.

However, it is crucial to know that these rates are only allowed once the construction of the house is complete, and cannot be claimed while the property is still under construction.

3. Appreciation of Capital

It is no hidden fact that property prices witness a fairly consistent surge over time. Besides, real estate prices have boomed in an unprecedented manner in the past few years. Hence, it is always better to buy a property right away, with the help of a Home Loan rather than waiting to accumulate the money and make the purchase at a later point in time. Not only will this step help you in reaping the multitude of benefits which comes with a rise in property prices, but it will also save you from buying the same property at a much higher price in the later years. Besides, taking a Home Loan will also ensure that the money which was going towards your rent will now go towards your Home Loan EMI, thus offering you the perfect return on investment.

Moreover, this crucial financial decision will save you from the constantly rising cost of construction that you will have to bear if you decide on constructing the home at a later stage, in a bid to avoid the loan.

Hence, in addition to entitling you with the appreciation of cost on your property, the Home Loan will also help you steer clear from the cost of inflation that you may have to face in the coming times.

4. Convenient Repayment Tenure

Home Loan is possibly one of the only loans wherein you can enjoy exceedingly long repayment tenures ranging from 10 years to 30 years at a stretch. The extended tenure can contribute largely in reducing your EMI outgo per month, thus making it fairly feasible for you to avail the Home Loan, and enjoy its benefits. Moreover, if you are sure of a consistent rise in your income, you can even opt for a Step-up Repayment Plan, wherein your Home Loan EMI will keep increasing as time progresses. This will help you in repaying your loan faster, while also saving on the overall interest outgo.

5. Ideal Way to Buy Your Dream Home

When you say you are saving up to buy the latest phone in the market, it often makes sense as you can save the amount over a span of 2-3 months. However, the same cannot be said for saving up to buy a home. A residential property often costs lakhs of rupees, a sum which cannot be saved by simple efforts. A better way is to opt for a Home Loan instead. In this case, you can gain access to the requisite sum of money instantly and use it for purchasing on building the home of your dreams, while putting the otherwise saved money towards your EMI. Trust us, this is a complete win-win situation, and that too for more than one reasons.

Now that you are aware of the incredible benefits of applying for a home loan, go ahead and file your application for SBI Home Loan or any other home loan of your choice and rejoice in the joy of living under a roof you can call your home.

Also Read: Benefits of Having a Co-Applicant for Home Loan

To apply online for Credit Cards, Secured Loans and Unsecured Loans, visit www.mymoneymantra.com, the leading online lending marketplace that offers financial products from 70+ Banks and NBFCs. We have served 2 million+ happy customers since 1989.