Benefits of Opting for a Home Loan

We live in dreams since childhood. Childhood dreams are for toys, teenage for clothes, footwear, stylish assets and adult age dreams of a heavy bank balance, status and a home. As we grow up, dreams begin taking bigger shape and we start dreaming big. Owning a home is everyone’s dream. Home is one of the assets we achieve with so much hard work, sacrifice and after a long wait. Buying a new home takes a lot from you. Your own home simply makes you feel that you have achieved a crucial milestone in life. Worries seem to fly away once you get the keys and put the first step in your home. It feels as if you have just experienced being in a wonderland. Nothing seems better than your own place. You enjoy, invite friends, eat, dance and celebrate the happiness of your own home.

With this, we cannot ignore the fact that the constantly increasing property prices are an immense burden and do not allow our pocket to fulfil the dream of a home. It is hard to buy an expensive home, particularly for middle-class families. Thankfully, in past few years, advance policies have introduced various plans that make it possible for everyone to afford a home of dreams. Home loan is amongst the smart plans that make it a relatively easy thing. The next section brings the interesting benefits of home loan, please go through.


Spending in a home is one of the largest investments you make in life. It takes a great amount of the money you save in your lifetime. Therefore, home loan gives a sense of accomplishment. Moreover, it becomes comparatively easy to pay in instalments.

Interest Deduction

If you have opted for a home loan to construct or buy a home, you can claim the deduction in EMI. For the claim, you must be the owner and the co-borrower to claim the benefit. Remember that you need to claim the deduction in the starting of the year in which you think the construction of the house will be completed.

Capital Appreciation

It is safe to say that we have seen an increase in property prices. No matter when you decide to buy your own home, property prices will only go high. They are never expected to decrease. Construction cost has increased by approx. 20% every year that becomes around 70% of the overall cost of the property. Not only construction cost but rent is also increasing every year with the inflation. The rise in rent and labour prices result in soaring prices of property. On paying off the mortgage, the home you buy may equal the value that doubles the mortgage amount.

An Appreciable Credit History

No matter whether you have a healthy bank balance or not, you are going to have an appreciable credit history. If you choose the mortgage, you can definitely have a good credit history. No need to mention that debt adds to decrease in your eligibility, however, the mortgage is a good sort of debt because it is related to the physical debt. Opting for a home loan leads to a slight decrease in credit score but the timely payments in six to twelve months will lead to an increment in your score. As you regularly pay the EMIs, it shows that you are responsible for paying within the time frame. As you pay instalments on time, your credit score will increase.

Tax Benefits

The home loan provides you tax benefits that are the most important advantage of it. Tax benefits are divided into two different categories: Principal Payment and Interest Payment. Under the Section 80C of Income Tax Act, principal payment lets you avail deduction on the amount you have borrowed, however, the deduction cannot go beyond 1.5 lakhs. In the case of principal repayment, your total income is considered. It is more beneficial if your spouse shares the loan as co-applicant which simply doubles the tax benefits. On the other hand, interest payment under the Section 24(b) of Income Tax Act lets you avail the interest deduction on the amount you have taken to construct or purchase a property. The deduction can also be applied to the reconstruction or repair of an old property. Interest payment is applicable for both commercial and residential properties with the maximum limit of 2 lakhs.

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