Why it is amazing to pay interest on a home loan!
Home loan interest rates seem like a dark cloud hovering over housing finance solutions. However, the interest you pay on such loans actually has many silver linings. It benefits you as much as, if not more than, it troubles you! It may seem hard to believe, but it’s true, and the following article will explain how this is possible in 3 simple points.
1. It allows you to buy a home!
Without a housing loan, you would probably have to save, and save, and save for years to collect enough money to buy a home. During this time, you might have to stay on lease and throw away truckloads of rent money – this is such a waste considering that rent money buys you nothing!
However, when you take a home loan, you can use the same money to repay your debt and in the process, become the proud owner of your own home. The only cost for this shortcut to homeownership is the interest you have to pay.
2. It is the cost of an investment.
Almost every good investment comes at a cost – this applies to a home loan as well. It might not strike you at first, but a home loan actually helps you invest in one of India’s most amazing investments ever – real estate!
By the time you finish repaying the home loan, the value of the property you purchased will appreciate significantly. This is commonplace for property in India and is also given the fact that home loan tenures easily run into 20 or 30 years. The difference between the cost price and current value of the property in question will easily offset the interest amount paid to date!
3. Tax benefits.
How can one forget that home loan interest rates actually help you save money! Under section 24 of the Income Tax Act of India, one can use the interest paid every year to tap an equal amount of deductions on their taxable income. This can reduce your tax burden significantly. Not to mention, you can also claim similar benefits on the principal amount paid in a year!
These benefits are applicable to co-borrowers too, no matter how many of them there are. They call claim these benefits as long as they are co-owners of the property as well!
Still worried about home loan interest rates?
Some borrowers are still worried about home loan interest rates. Well, you can reduce them by co-borrowing with a woman; they get rates that are 0.05% lower than normal rates. Also, try to get floating rates as they are lower than fixed rates. If you’ve already borrowed the loan at high rates, you can consider refinancing your loan with a new lender to get lower rates. Prepayments are also good, they do not lower the interest rates but ensure you pay less interest and get out of debt quicker too!
Hope this article has been helpful and gives you the impetus need to go ahead and apply for a home loan, especially if you’re shying away from doing due to interest rates. Good luck and congrats in advance on your new home!