Home Loan Vs Buying House in Cash: Why some people choose home loan even if they have money? 4 key benefits every buyer should know
Home loan Vs. buying house with own money: Home loan is invaluable for those who do not have enough money to buy a house, it provides a lump sum amount which is gradually repaid in installments. However, many individuals who have the required funds still choose to take a loan from a bank when purchasing a home. Why?
Home Loan Benefits
Because home loans offer several significant advantages. Here are four key benefits:
Home Loan Benefits: First Advantage
One major benefit of taking a home loan is that it ensures the property you are purchasing is free from disputes. Before approving the loan, the lender thoroughly checks the property’s title and records to confirm that it is legally sound.
Home Loan Benefits: Legal Verification
This legal verification process ensures that all necessary documents are in order and that the property is not claimed by anyone else.
Home Loan Benefits: Second Advantage
The second significant benefit of a home loan is the tax savings. When you buy a house with a home loan, you can save substantial amounts on taxes each year.
Home Loan Benefits: Save up to Rs 2 lakh annually
Current tax laws allow a deduction of up to Rs 2 lakh annually on interest payments under Section 24(b) of the Income Tax Act.
Home Loan Benefits: Claim tax exemption of up to Rs 1.5 lakh
Additionally, under Section 80C, you can claim a tax exemption of up to Rs 1.5 lakh on the repayment of the principal amount. If the loan is taken jointly with a co-applicant, both individuals can claim separate tax benefits, potentially saving up to Rs 7 lakh in total taxes.
Home Loan Benefits: Third Advantage
Home loans typically have lower interest rates compared to other types of loans. Experts believe that interest rates on home loans may become even more favorable in the future. Therefore, instead of using your savings to purchase a home, it’s often wiser to take a home loan with better interest rates, allowing you to preserve your savings for retirement and other future needs.
That is why people opt Home Loans
This is why many people, even those with sufficient funds, choose to finance their home purchase through a loan.
Home Loan Benefits: Fourth Advantage
Another benefit of a home loan is the option to top it up. If you buy a semi-furnished or older property, the cost of renovations and interior work can be significant. Instead of dipping into your savings or taking out a personal loan, it’s more cost-effective to use a top-up on your home loan.
Home Loan Benefits: Top-up loans are cheaper
Top-up loans are cheaper than personal loans, have no hidden charges, and offer more flexible repayment terms.