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Five advantages of taking a home loan for rent payers
There are millions of people around the world who are homeless, some have their own house they inherited or have bought in cash, and some are regular rent payers. Today I am writing this article for those rent payers, who are searching for taking a home loan and save their money spent on paying high rents. The rent they pay can be used in buying their first property by the way of taking a home loan or mortgage loan. Now there are various advantages of taking a home loan for buying a property and they are:
- You save on monthly rent. By paying monthly installments on your property rentals, you were only draining away all the money. Now that money is being utilized in buying a home.
- The interest you pay for loan could be claimed as a deduction from the income from HP, the house you own has zero income and suppose you have paid some 20000 as interest, that interest you can claim as deduction, so you save tax on Rs 20000 by claiming deduction. According to the current income tax slab on home loans, government allows up to 150000/- in interest and principal that you can claim.
- If you pay the home loan installments monthly in approximately 15 years to 20 years, you will have your own house. If you are able to pay part-payments or prepay all home loan, you can have your own house early than that.
- The appreciation in the value of the property in 15 years is yours. For example, the house you bought with home loan is 10 lakhs. Down payment required is 1 lakhs generally. Loan taken on 9 lakhs for 15 years and the installment is generally 12000 per month. Your rent paid is Rs. 5000 per month, so net effective increase in payment is just Rs. 7000 every month so after 15 years, the house is yours. The tension of increase in rent every year is gone away.
- The appreciation in value of the property value is yours. The value of the house may be 60 lakhs after 15 years.
So above were a few advantages of taking a home loan for rent payers. There are many other advantages of home loan that I will share in my upcoming articles. Regarding risks, there is no risk in buying a home if you buy it from a genuine person and take home loan from a well established bank, either nationalized or international. By taking a home loan, the only risk is you should be able to pay the installment timely every month for maintaining good credit score. Besides this, there is no other risk as such.