In India, people have a different intrinsic emotional value attached to having their own homes. This has been primarily made possible due to various financial assistance provided by multiple institutions. Having a home on our own can cost way more along with the vast immediate payment to be made whether to buy, construct, or repair a home. This payment can be made monthly easily in small proportions over some time. That is why banks came with the concept of EMI (Equated Monthly Installments), which are nothing more than the interest and principal payments to the banks. They are to be paid monthly and hence become more bearable by the borrowers.
Before availing of a Home loan interest rate, a person should identify their needs regarding why they are going for a home loan.
As a home loan is offered for various purposes such as-
Home renovation.
Home purchase.
Home construction.
Improvement of house.
Extension of home.
Acquisition of Land/ Plot.
A person must identify their needs, and if they fit anywhere in between the above points, they must go to avail a home loan.
The following advantages of home loans will also provide a better understanding as to why you should go for a home loan-
Affordable rate of interests-
People in our country are more saving-oriented than expenditure-oriented. Home loans offer loans at much lower interest rates that seem very affordable compared to any other sort of loan available in the market. The rates of interest are charged keeping in mind the middle-class person of the country.
B. Helps in the improvement of credit score-
With prompt and timely repayments, the credit score of an individual takes a boom. A credit score is a significant factor for anyone to get loans in the future. A credit score is a measure to know the creditworthiness of an individual. A person with a low credit score is seen as a risky person by banks.
C. Tenure and payment flexibility-
Home loans come with a lot of flexibility, both in terms of tenure selection and payment options. Home loans are available for a short period and prolonged periods that can go upto 30 years. Payments of such home loans are to be made in EMI (Equated Monthly Installments), which are to be paid every month. This makes the repayment even more accessible, and the borrower feels less burdened as there is no need to make a heavy repayment all at once. It has to be done each month in small proportions over some time.
D. Income Tax benefits-
Income tax acts provide significant deductions in terms of payment of EMI to banks by the borrower. The borrower can claim an Income tax deduction under section 80 C of The Income Tax Act for the amount of EMI made.
This helps a person to enhance their savings in the form of tax savings under Income tax.
E. Better option for future growth-
If one has their property, there are bound to get many benefits arising from it in the future in terms of capital appreciation. Capital gains will also be made if the person wishes to sell their property in the future.
F. Many options available-
Due to the advent of technology, banks, and other financial institutions have made their online portals host their services, trying to serve maximum customers with satisfaction. There are many such banks and financial institutions available in the market providing their services. This creates clutter, and the customer gets to choose from a variety of options and select the best one. There is no way a monopoly in the financial market. Many foreign banks are also in the competition providing their services, such as Syndicate Bank home Loan, which calls for more strict compliance and healthy competition.
Conclusion-
A home loan is a safe and secure way of raising finance to get home. Home loans are made available through both online and offline modes, but in the current situation, online mode is the most preferred and promoted way of applying for a Home loan.
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