Should you take a loan or give the rent?
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Everyone holds a few things very close to their hearts. One such is thing is their home. Home is not just a building made from concrete and iron, home is made out of emotions. Home is where the heart is. But there the lack of money comes in between you and your dream house.
There are many financing options and taking a home loan is the easiest one. Why wait for several decades when you have a home now. Taking a home loan is easy and there are several benefits of taking a home loan as well.
Taking a home loan makes it possible to get the dream house as you can pay easy monthly instalments towards the house. For many people, buying their dream without loan is next to impossible.
The rent that you pay does not have any future value. It is a sheer waste of money. While on the other hand, when you take a loan, you are also generating an asset. You stand to gain from the rise in prices of the property over the years. Also, in metro cities, rent tends to increase very fast and it may be a stressful condition going forward.
You can claim tax deduction of up to Rs.1.5 lakh on the home loan under Section 80C of Income Tax of India 1971 Act. You can claim a deduction of up to Rs 2 lakh on the interest paid towards the home loan under Section 24B of Income Tax of India Act. The deductions are valid only for completed projects.
To make the loan easy on your pocket, you can opt for longer loan duration. Home loan buyers have the benefit of extending the loan up to 30 years. However, with the increase in the number of years, the total interest paid will also go up.
If you want, you can clear off your home loan on floating rate well ahead in time without attracting any prepayment charges. You can use your surplus money by paying towards the home loan to lessen your burden and save on interest as well.
You can also transfer your home loan to a different lender offering a lower interest.
Having a home gives a sense of security. You no longer have to worry about your landlord or the fear of being evicted over stupid reasons. You can enjoy life and decorate your home as you please.
When it comes to home loans, loan applications by women fall behind men by a huge margin. However, women can reap many benefits by applying a home loan. Many banks offer lower interest rates for women
State Bank of India offers attractive interest rates and flexible repayment options to women through their Her Ghar scheme offers. Moreover, the stamp duty charges are also lower for women applicants.
Many banks and non-banking finance companies offer lower interest rate on home loan applications by women. The concession can be anywhere between 0.05% and 0.1%. Although it does not seem like much but when we take into account 15 to 20 years and lakhs of rupees, the difference becomes significant.
Women applicants can also save on stamp duty. Different Indian states give a reduction of 1% to 2% in stamp duty. This too makes for significant savings.
Home loans for women also come with attractive offers such as gold coin, jewellery vouchers, or a free holiday.
Everyone wants to get a home but the main question to answer before taking a home loan is whether it is the right time to get a home loan. Buying a home makes sense when you are sure that you want to stay in the same city for a longer period such as 15 to 20 years. If not, renting is the better option.
Another factor is the expected appreciation of the property. If the property price is expected to skyrocket in the coming days, you can think of buying the property, as it will give handsome returns on sale.
For example, let us assume that the current property price is Rs. 80 lakh and the current rent of the property is Rs. 20,000. Your salary is Rs. 1 lakh and the expected property appreciation per year is 10%. In this scenario, you stand to gain Rs. 35 lakh in 15 years if you buy the property.
You can calculate whether you should rent or buy through this loan calculator.
To conclude, having a home is everyone’s dream and a home loan can make your dream come true.
