Importance and Benefits of a Home Loan
Home loans are one of the most important factors in a person’s life. They help people get their dream home without having a financial burden. Many people don’t have the finances to buy a home. They find it hard to get the money for a house. This is where a home loan comes into the picture. A home loan lends money to the borrower to buy a house. A person can buy a home or purchase land with home loans.
However, it is important that a person knows they can get 75% to 80% as a loan. A bank will only lend a loan when the borrower has 15% to 20% of the money to buy a home.
There are some factors that a borrower must look while getting a home loan-
- Lender’s Credibility
There are many banks which offer home loans, but not many that can help a borrower. Banks can reject a person’s loan after getting them to file for a loan. It can make other banks to reject the loan. A borrower must look for a bank with good credibility.
- Interest Rate
A borrower should look for banks that offer loans at a low interest rate. A person can borrow loan on fixed or floating interest rate. The interest rate stays the same when a loan is borrowed on a fixed rate. However, it can rise or dip when a person gets a loan on a floating interest rate.
When a person borrows a home loan, they must pay it back in EMIs. A home buyer should know the amount of money they can give in EMIs after paying for the daily expenses.
Here are some benefits of getting a home loan-
- Prepayment Charges
If a person has money to prepay the home loan, then they can do that without paying penalties. Banks don’t offer such a facility to other loans. However, there are no penalties only for loans borrowed on a floating rate. A fixed rate home loan borrower must pay prepayment penalties.
- Tax Benefits
One of the most important benefits that home loans offer is the tax benefits. The government allows loan borrowers to file for deductions. A person can claim for a tax deduction of up to Rs. 1.5 Lakh as per the Section 80C. However, a home loan borrower can get a deduction only when the house’s construction is complete.
- Loan Transfer
If a person finds a bank that offers loan at a low interest rate, then they can transfer their loan to that bank. A home loan borrower can transfer their loan to a different lender if they offer the loan at a lower interest.
While it is not hard to get a home loan, repaying it can be difficult. A person needs to know the amount they can pay for loans after meeting all the house’s expenses. A person must find a bank that offers the loan at a lower interest rate. The lender has the house as collateral and releases it only after the repayment of the loan.