Home loans also known as mortgage loans are loans that an individual borrows from the bank or a company in order to buy a real estate or borrow money by keeping real estate as collateral. Buying a house is one of the major financial decisions you will make and a really good investment. Buying a house is a really difficult task and to top it off getting a loan from a reliable source. The individual pays back the money on a monthly basis back to the bank or the company with some fixed interest. It’s impossible to buy a real estate property entirely based on your savings if you are a middle class family so home loans come really handy. And even if you are taking out a loan by keeping your real estate as collateral it’s a good option as it gives you enough time to repay and you can tend to your immediate monetary needs. Here are some advantages of taking a home loan :
- MAKES BUYING A HOME EASY OR TENDS TO YOUR IMMEDIATE MONETARY NEEDS : As mentioned earlier, if you are a middle class person it’s impossible to buy a house entirely based on your savings so home loans are a really good option. It provides you a loan immediately by doing a background check if you will be able to repay the loan. If you need money on an immediate basis for some medical emergency or any other emergency, you can keep your house as collateral and get a loan on it. The EMI’s are generally affordable and also based on your income. The tenure for repayment is generally long, that’s why the EMI’s are small.
- COST EFFECTIVE WAY OF CREDIT : Your property for which you are taking the loan or the property which you kept as the collateral acts as your security. The interest rate of home loans are generally really lower than other personal loans. The lender keeps the property as the security that’s why the interest is low in home loans. A reliable home loan company has practical interest rates and time duration.
- CAPITAL GROWTH : Real estate is a really good investment . The value of real estate is increasing time by time. So the capital increase in your real estate might be bigger or higher than the interest you pay on the home loan. If the interest on your home loan is 10% and the value of your real estate increases by 20% then the capital appreciation would be higher.
- GUARANTEES PROPERTY SAFETY : Buying a property is rather expensive and you would obviously want to make sure that the property doesn’t have any legal issues. When you go for availing home loans, the company, bank or the lender will do a complete background check on the borrower as well as the real estate. They are investing their money in it so it makes sense for them to make sure that there aren’t any legal issues regarding the property and all the paperworks is proper and legal. If the lender finds something improper and rejects the loan , it acts as a safety net for you too.
These are some benefits of home loans. If you repay the loan in time and diligently , you will be classified as a responsible and safe borrower. Along with these, there are many tax benefits with home loans such as you can claim tax deduction if you mortgage a property against the loan.
