Owning a house brings with it a sense of identity, status, and financial security. Having a home means a lot to anyone. Buying one can be one of the biggest financial decisions you can make in your life. However, given the current financial instability induced by the COVID-19 pandemic, owning this sense of ownership, peace, status, and freedom can put a burden on your shoulders.
So, if you wish to buy your dream house but do not know how to manage your finances without putting a constraint on your savings, it would be wise to apply for housing finance. Getting a loan is the best way to buy your dream house without dipping into your savings or investment. You can obtain up to 80% of your property’s market value as a loan. However, your eligibility for a higher loan amount depends on factors such as age, income, credit score, current financial obligations, etc.
Here are the top benefits that you can avail of while financing the purchase of your dream house:
- Multiple property options
The best thing about housing finance is that you have multiple property options to opt for. For instance, if you have a stable and recurring income, you can afford a large space for your home. It enables you to purchase a home based on your budget. It is worth noting that housing finance in India is based on the specific needs of borrowers.
- Affordable interest rates
Compared to other loans in the market, a home loan on EMI is the most affordable option as your interest rate drops every year. As your interest rate decrease, so does your home loan EMI. A lower home loan EMI is what makes a home loan attractive and affordable. It allows you to plan your monthly budget and focus on other financial obligations at home.
- Tax deductions
Another benefit of a home loan is that you can avail of tax deductions under section 24 of the Income Tax Act 1971. The tax deduction is a way to encourage more and more Indians to buy their own homes. You can get tax benefits of up to Rs. 150,000/- in a financial year under the 80C of IT Act, and tax deduction of Rs. 200,000/- on the interest paid under section 24 of the IT Act. Keep in mind that tax deductions are available only when the construction of the house is complete.
- No prepayment charges
Unlike other loans, you do not need to pay any penalty charges for paying the home loan amount in full before the due date. It is worth noting that you will not have to bear any prepayment penalty if you opt for a floating rate of interest. So, if you get to have a surplus amount in your bank account, you can choose to prepay your home loan and get rid of the burden sooner than usual.
- Balance transfer
If you happen to find another lender in the market who offers better deals than your current lender, then you can easily transfer your home loan balance to avail of better rates. Opting for a balance transfer enables you to access lower interest rates and longer loan tenure. Before opting for a balance transfer, make sure to assess the benefits through a balance transfer calculator.
Conclusion
Housing finance is the best option to achieve your dream of owning a house without dipping into your savings. Before applying for a home loan on EMI, make sure to assess your needs and check whether or not you can repay the loan amount with interest on time.
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