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Reasons to Obtain a Home Loan
Purchasing your first home can seem like a very daunting process. There are so many things to think about when it comes to obtaining a home loan that many people are quite unsure of what will be required of them. Some people even worry that they will not be able to get the best deal possible on a home loan simply because they do not have enough knowledge of the subject. However, obtaining a home loan can be one of the most productive and successful things in individual couple can do in their lifetime. If you are wondering whether or not you should purchase a property you may be interested to learn a few reasons to obtain a home loan.
When you obtain a loan to buy a property you will then own your own home. For many people this brings about a sense of security and happiness that they have never experienced before. Owning your own home means that you have somewhere to call your own that you can then decorate and alter to reflect your own personality.
Couples want to obtain a home loan so that they can start their life together and think about starting a family.
Owning your own property also brings about more financial stability, something which a lot of people do not have until they move into the first house they buy.
Once you have purchased a property using a home loan you will then have an amount of equity within that property. This means that in the future you could borrow against that equity or extend your loan in order to improve the property even further. This is something that individuals without home loans are unable to do as they do not have any equity on which to borrow against.
Once an individual or couple have obtained their first home loan they can then go on to obtain further loans for bigger properties, should the need arise. It is these first steps on to the property ladder that can make all the difference for the future.
Owning your own home means that you no longer have to pay out money every month in rent to a landlord. Many people find that paying rent feels like dead money as they will not receive anything back in return. Home loans on the other hand actually provide lenders with a sound investment for the future.
In certain cases some people will even buy properties in order to make money on them. In this way obtaining a home loan is a sound business move and can help an individual to build up a portfolio of properties that they buy and renovate and then sell.
Of course there are more reasons why an individual or couple would want to obtain a home loan, and these are just a few of them. Owning your own property is one of the biggest steps a person can take, but also one of the most rewarding and satisfying.
What is Home Loans and Benefits of Home Loans
A Home loan is a loan provided by a bank/financial institution to finance the purchase/construction/renovation of a residential property. It is a much sought-after product because often people do not have the required capital to fund their purchase.
Earlier, there was little borrowing and people generally tried to avoid creating debt.Now with the situation having undergone a change, borrowing to create an asset is not only common but in many situations makes good economic sense. A house is generally considered to be an appreciating asset. This is because the price of the property is expected to rise over a period of time. This makes financing of such a purchase by borrowing a good way to own and create an asset without having all funds for the purpose. Financial planners will always advise against taking a loan for undertaking expenditure but encourage borrowing for buying a house.
The prices of houses in India have shot up quite significantly. This makes a full payment for a house from the existing savings a very difficult task for most Indians, creating the need for housing loans. There has been a sharp jump in the earnings for many people but this does not cut the requirement for a loan to purchase a house.
Home loans are typically long-term loans, with repayment periods of up to 20 years. The house financed is mortgaged with the bank providing the loan. There is an option of fixed and floating interest rate when one goes in for a bank loan. Residential property prices India have shot up significantly, so many people have no option but to bank on housing loans. A person earning Rs 5 lakh a year will aspire to own a house that costs between Rs 15 lakh-Rs 20 lakh while someone with a pay packet of Rs 20 lakh a year would like to own a big- ger house in a better locality that costs anything between Rs 75-80 lakh.
The ability to repay the loan over a long period makes borrowing affordable for an individual because it fits the monthly outgo within his/her income.
Here are some advantages of a Home Loan
With real estate prices skyrocketing in most Indian cities, it is not always possible for the average person to purchase a home out of his/her savings. In such a scenario, a home loan is an attractive option for financing the purchase of your dream house.
If you don’t own a house, you are probably residing in a rented property. So instead of paying a monthly rent to stay in a rented house, you might consider paying a home loan Equated Monthly Instalment (EMI) and stay in your own house.
You can also avail of tax benefits on the principal and interest amounts paid by you towards your home loan. This benefit would be in addition to any HRA tax benefit that you might be deriving.