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The dream home is not a fantasy but a real dream of millions or billions of people. The home loan is today the biggest contributor in turning these dreams into reality. Although, home loan is indeed a big financial commitment, and it often brings with itself anxiety, budget stress, etc. But when you lie in the comfort of your own home all those worries and anxiety get easily evaporated into thin air.

 

Availing a home loan has some great benefits, some of the notable ones are:

  1. The interest rate on home loan at current times is at its all-time low. Since home loan is covered by your property which reduces the risk of the bank associated with the loan and as a result, its rate of interest is always low as compared to other loans.
  2. It has tax benefits for both principal and interest payment. Section 24(b) provides up to Rs. 2 lakh deduction for interest on home loan and Section 80C provides upto Rs. 1.5 lakh deduction on principal repayment of home loan.
  3. It also gives a sense of accomplishment as you have turned your dream into a reality.
  4. Also, over a period of time, the value of real estate increases. This phenomena of capital appreciation also contribute to making your future more secure from inflation.

 

When you have your own home, it’s not just one thing for you. Your own home is your wealth; it is also a safe and secure place for you to come, it’s a place where with your family you create a lifetime of memories and much more. That is why many people have a dream to build or buy their own house. However, not all are able to fulfil this dream because of the cost involved. Buying real estate is not a small expense. In fact, for many, it involves investing their whole life’s savings in it. All cannot make such a huge expense, and this is where a home loan comes to the rescue.

 

In today’s time, a home loan has become the primary source of funds for buying new homes in the country. It enables people to pay the cost of their house in affordable instalments and also live in the house simultaneously. Even though the home loan is probably the biggest liability most people have in their life, it comes up with some amazing benefits, which makes it a first choice. Some those key benefits are:

  1. Tax Benefit: Home loan provides a significant amount of tax benefit on both interest and principal repayment. According to Section 24(b) of the Income Tax Act 1961, up to Rs. 2 lakhs of deduction can be claimed for the interest payment of the home loan in a financial year, subject to actual interest paid. This deduction is available for the home loan availed for either purchase of house property or construction of one. However, in case the loan is first availed prior to 1st March 1999, then the benefit is reduced to Rs. 30,000.

 

In addition, as per Section 80C of the Income Tax Act 1961, a deduction up to rs. 1.5 lakhs is available for payment of principal amount towards home loan in a financial year.

  1. Capital Appreciation: It is a well-known fact that over a period of time, the prices of real estate increase. Primarily when it is located in a city. Thus, capital appreciation is also one of the biggest advantages of buying a home by availing a home loan. Both construction cost and rent have seen a big shift upwards over the last 5 years or so. Investing in your own home can be wealth for you, which can, later on, help you fight inflation.
  2. Sense of Accomplishment: It is a dream of people to buy their own house. So, when your dream finally turns into a reality that feeling can’t be expressed in words. It is nothing less than an accomplishment. It is also a big financial commitment and maybe the biggest that you will make in your life.
  3. Low-Interest Rate: In view of the recent developments in the past year, the interest rate of home loans are now linked to the repo rate. Given the current government’s stance over housing and home loan, you can be sure that home loan interest rates are not likely to go high for a home loan in the next 4-5 years at least. Besides, at the current time, it is at the lowest level in the last 20 years or so. Besides, in general, the home loan interest rates are low as the loan is secured by the property, which brings the risk of the bank to a considerably lower level.

 

In most cases buying your own house is a much better choice than renting one. Because if you look at the overall amount that you will end up paying in rent for a period of time, it could easily sum up to the cost of a house that you can buy now.

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