Read on to know about home loan advantages. Find
out the need for investment in housing loans
Need for Home Loans
Few decades back, buying a home was not a very easy task as there were hardly any lenders available to loan the ever increasing astronomical lump sum of money. However, with time, the rising property prices and the burgeoning housing finance market in the country, made the phenomenon of the home loans easy and the dream of buying a home possible. Also, the HFC’s (Housing Finance Companies) and banks have come up with so many home loan plans that they have become an answer to every customer’s necessity. Apart from this, the changing equation of market has also provided customers with several reasons to opt for a home loan. Here are few reasons to why home loans have gradually became a necessity in the society.
Home Loan Advantages
- The need for home loans arises not because property prices are heading upwards all the time but because home loans make great sense from a long-term savings perspective. Not only are home loans a handy tool for the common man to own a roof over his head but they also help save money in the long run.
- With skyrocketing real estate prices, people are increasingly opting for housing loans to acquire their dream home. Interest rates are coming down all the time and the housing finance companies are literally falling over each other to lure the prospective home-seekers.
- Not with standing the tax breaks and generous lending rates, a lot of people still can't arrange resources for the down-payment, which comes out to be at least 15 per cent of the property value. Taking cognizance of the situation, HFCs are coming up with home loan products called ’zero down payment loans,’ wherein 100 per cent funding is provided for select properties. These lucrative offers are other major reasons for why people are opting for home loans.
- Even if one can afford to buy a home with one's own money, home loans should be availed because they act as good savings instrument. According to industry estimates, the long term average return in investing in a home is about 20% p.a. while the average cost of borrowing funds in the market today is about 10% p.a. (considering all tax breaks).
- For salaried employees, housing loans are the best way to avail tax benefits. Many people simply go for the home loans in order to avail these benefits. Interest payments up to Rs 1.5 lakh on housing loans are deductible from the taxable income and there is a further tax deduction of Rs 4,000 against repayment of principal. In case a person stays in a rented house, the cost of the loan will be nearly zero per cent since he will be saving a decent amount on rent.