Benefits Of Taking Home Loans To Buy Your First Property
The high prices of real estate can make it difficult for you to buy your dream home. Fortunately, with home loans, you can easily purchase a property by funding up to 80% of the property cost. A home loan is extended to you to buy a house, where the house is mortgaged with the bank or financial institutions until the repayment is entirely made. Therefore, the creditor will hold the property title deed when the housing loan is repaid in full and with the accumulated interest. You can take it to purchase a house or construction and renovation of the house. Below are the benefits of taking a home loan;
Makes Buying a Home Affordable
The loan will make it easier for a middle-class salaried individual to afford to purchase a home. Buying a house entails large sums of money that you may not be able to save for an outright purchase. Besides, lenders may reject or sanction your home loan application based on your credit score and the ability to repay. Hence, if you have a steady income source and can repay the EMIs, the lender will likely approve your application. Luckily, home loans have long tenure, meaning that the equated monthly installment is minor and affordable.
A cost-Effective way of Availing Credit
The advantage of home loans is that it has a lower interest rate than other forms of loans such as a personal loan. The lender will use the house that you wish to buy as security against the amount borrowed. Although the home loan has the lowest interest rate, it is essential to understand that it will differ from one lender to another. Since large sums of money are involved, even a slight difference in interest rate will significantly impact. With a low-interest rate and long tenure, the EMIs will be more affordable, and your regular repayments will build your credit score.
Guarantee Safety of the Property
Purchasing a home is a considerable investment, where you would like to ensure that the property you are buying is free of any legal issues. This is where home loans are a great boon. Your lender will always perform due diligence on the credibility of the property and the builder. The lender would not want to lose his money by investing in a property with legal issues or disputes. Therefore, they will review the paperwork to ensure that the building is standard and the builder obtained all the required clearance certificates from the authorities.
Lastly, you should secure a home loan to buy a house. If you mortgaged your home against a loan, you could claim a tax deduction on the principal and interest part of the repayment. These deductions can be colossal amounts when calculating the overall annual tax obligation. Furthermore, a home loan does not attract prepayment charges. Hence, you can use it to make part payment of the home loan and lower the burden whenever you have surplus money. However, please note that floating rate home loans will attract prepayment charges.