When managed correctly, a loan is the biggest enabler of dreams. In the case of a life goal as significant as home ownership, a home loan is a tool that benefits countless people. Nevertheless, there are many people among us who have enough funds to purchase their own homes without the assistance of financing.
They are often faced with a dilemma: should they spend all of their savings on buying a property and avoid debt or remove a loan instead? This cannot be solved by a single solution.
Still, home loans are not just a result of a lack of funds. Those looking to buy a home will find that this financing option provides a number of benefits. With a low rate of interest, a home loan is one of the least expensive ways to borrow money.
There's no prepayment penalty attached to mortgage loans with floating interest levels. Therefore , getting a loan definitely has its advantages. The tax great things about a home mortgage
Growth potential for your fund
Although you may be able to buy a house with your own money, you might still want to take out a home loan to save on taxes. In this manner, you can generate an attractive return on your investment.
For example , home loans with floating interest rates currently range from 7. 9% to 8. 3% a year, depending on your credit score, loan amount and tenure. These record-low rates are on offer after RBI directed lenders to link retail loan rates for an external benchmark like the repo rate.
Gains from liquidity
In cases of liquidity crunch, you may need to have a financing facility, such as a personal loan or collateralised lic home loan, it may cost you much more in interest compared to your home loan interest amount.
Investing in a home with your personal funds while living in a liquidity crunch appears to be counterproductive. You'll be protected against life's uncertainties if you put your funds to work.
Bank's due diligence on property
Before financing a project, the banks do extensive research, reducing your risk to an extremely low level. They ensure that the project's papers, title, and legal clearances have been in order before approving a loan. Because of this, when you take a home loan from the financial institution that has already approved your project, it becomes safer than an unapproved project.
Owning a home when it's time for you to buy
There is no single solution to the "own funds versus mortgage loan " dilemma. Should you be absolutely certain that it won't have any negative effect on your other important financial goals and you’d be left with enough liquidity even with making the payment. This could be a choice even for those who feel uncomfortable handling long-term debt.
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