Buying a home is certainly one of the most considerable decisions made by a person in his life. For a prospective buyer, a home is not just a place to live but a significant financial investment that can become the biggest savior in various unforeseen circumstances. This is why this is one thing that most people want to have one day in their lives. And buying a home also has its emotional attachment because there is no other feeling than living home of your own home.
It is also certain that everything comes at a cost and the same goes true in the case of home. In fact, a large portion of your money will get into buying your dream home. If you have enough money to buy a property directly, it is better. But what you are a salaried person? In that case, you would have to keep a fixed part of your monthly income to pay for the home loan EMI. Does this sound good? Should you invest in any such thing? Is it worth taking a loan to buy a house? How much down payment for a home is good? Well, you will get to know the answers to all these questions right here in this post.
Buying a property like a home is a big investment and needs a huge amount of money. This is why it becomes necessary to take any such decision carefully as it tends to have a long-term impact on your overall finance. Now, when it comes to buying a home, there are primarily two payment options – opting for a home loan or paying the entire amount of the property directly. If you have enough funds, there is no point in choosing a home loan and paying interest. Despite this, a majority of people prefer to take a home loan and there are various reasons behind this. The prominent ones are listed below:
Tax Benefits:
Tax benefit is one of the main benefits why people prefer to take a home loan over cash payment for purchasing a home. On 1st February 2021, in Union Budget 2021 the GOI protracted the extra tax deduction of ₹1.5 lakh on interest paid on housing loan for the acquisition of affordable homes by one more year. Therefore, homeowners can now get a deduction of up to Rs. 3.5 Lakh till March 31, 2022.
Extra money always comes in handy:
Even if you have enough funds to buy a home, it is not a good idea to spend the whole of it buying a property. You need to keep some cash aside for any financial emergency that may strike later. Rather than spending all the money on buying a property, you can choose to maintain an emergency fund. You could also use the amount to accumulate your retirement corpus. Having an emergency fund can come in handy during the most trying financial circumstances, including paying home loan EMIs during stressful times like COVID19.
Improve your credit score:
If you think that not taking a home loan to buy a house would improve your credit score, it is not as sometimes not taking any kind of loan can also make a negative impact on a person’s creditworthiness. Every single home loan EMI you pay on time, your credit scores get better.
Consider other property options:
If you decide to pay money upfront for the purchase of a property, you are more likely to stick to the budget readily available to you. This way, you may end up meeting halfway to your dream home. Your budget can end up confining the type of property you can buy. This is where it makes sense to take a home loan to buy a house as you can explore properties beyond your budget and look for better property options. If you are thinking about how much down payment for a home you can make, you can utilize the money you have for the down payment and pay the rest in EMIs. Isn’t it a good option to secure your dream house?
The Conclusion
At a time when banks and other financial institutions offer attractive home loan deals and offer, taking a home loan to buy a home is certainly the most preferred way for home buyers.