Planning to buy your dream home? Know in detail the pros and cons of Home loans
Having your own house is a blessing but not everyone has it. Today having a shelter is the topmost priority of an individual. Whether you talk about newly married couples or aged persons, they all desire to have their own house. Though the rate of properties has risen to much higher extent but banks have made it so easy to own a house. There are so many loans available like auto loan, home loan, higher education loan. Banks are ready to cater your needs with best options available.
There are things which are essential for survival like a home, car or any other big purchase like air conditioner or refrigerator, but you don’t have enough money in your pocket. To help you out banks provide loan. Loan is like an asset for bank and generates business for them. Each and every loan has to be paid back with interest applicable. All the banks have their own rate of interest for loans. It can vary from 8% to 11% depending on the bank and type of loan sanctioned to you. Today home loans are the most famous one as nobody wants to live in a rented flat or apartment. Rented flats and homes don’t give that essence of ownership which your own home will give. Let us know the benefits of home loans:
- Feeling of accomplishment: when you own a house, you feel like you have accomplished something in your life. A satisfaction of having a home is greatest among all. Though taking a home loan can be the most difficult decisions of your life but if you earn a decent salary then it is easy to repay the loan you took from the bank. It is necessary to realize that the loan you took has to be paid back on time to maintain good credit record. So it is not as easy as it looks. You have greater responsibilities towards bank and your family. So before applying for home loan better check your pocket too.
- Rate of interest is low and duration is more: home loan amount can vary from person to person depending upon their need. All the banks offer their own rate of interest and duration of loan. The banks follow the guidelines of RBI and have their own loan policies. Rate of interest also depends on the credit history of a customer. If you have good credit history, there are chances that bank may provide you certain discount or offers on loan you applied for.
- Benefits of tax deductions: as we all know that if you earn more than 5 lakh, income tax is going to be deducted from your salary. If you have taken a home loan then you don’t have to worry about the income tax deductions because no income tax will be levied on your salary if you have taken any home loan on your salaried account. So indirectly it saves your income and you can use it in paying your interest on time.
- Commitment of long duration with bank: if you are planning to take any home loan then you must know that the monthly installments of your loans are going to last for approx. 10-15 years depending on the duration chosen by you. So you have a long time commitment with the bank and it creates good customer relations with the bank.
- Online home loans: Earlier, the loan sanctioning process was really tiresome and complicated. You had to visit the bank several times for face to face meeting with the bank officials and after a lot of paper work; the loan is sanctioned to you. Now the banks have online applications on their websites. You can simply visit the website or download the App from Google play store, register yourself and apply for the loan by uploading the required documents. You have to be careful with documents as each and every document is checked by the bank officials. You will get a call from the bank officials and you have to visit the bank and have a meeting with officials. So the online application process saves your time and there is less paper work.
So as you have read about the benefits of the home loans, everything has pros and cons, let us know some of the cons of Home loans:
- Fluctuations in Real estate market: Real estate market is not a fixed market. The rates of properties go up and down depending on the economy of a nation. There is a risk that the value of the property you bought or made by taking a home loan will decrease due to real estate market fluctuations. Before applying for home loan, do keep in mind the real estate market factors.
- No other investment opportunity: when you borrow a loan from the bank, you have to pay the monthly installments on time. The money you spend on paying the EMIs, could have been invested somewhere else. So indirectly, your options of investing money in other assets are blocked due to home loan. So if you are planning to invest your money into some business, you should stay away from the home loan
Thought the advantages outrun the disadvantages, you must now ignore the risks involved with home loans. The long time commitment may be good for some people but it can be bad for others. Long term commitment with banks is not easy as there can be any loss or you can lose your job anytime and if you are not able to pay back the loan, then there are chances that you may lose your property. You can easily apply for loan on the website and all you need is to upload the important documents required and you will have your own home within days. So if you have planned to buy your own home, search your dream home, banks are waiting to provide you the best financial services available.