Imagine being working hard to chase your dream. You try hard to live a lifestyle that you dream of giving to your family. Your success matters in today’s scenarios because one can get an idea about your living standard according to your lifestyle, and home carries an essential space in defining it.
One of the justified reasons people opt for a home loan is to achieve the dream of owning a house as soon as they can. It means obviously that housing loan gives the advantage to achieve housing goals.
The Dream House:
Who does not want their dream home? As we all know, saving for a home is not so easy as it requires a considerable saving, but it is not so possible because there are several other problems that one has to cope with. Every time you save, a random problem arrives, and you can’t control it to happen. And if you try to draw up that kind of money, by the time the price of property rises. With a housing loan, buying capacity of an individual increase, and you can easily afford to build a house in less time.
Low-Interest Rate:
Another plus point for a home loan is that it is subjected to market finance risk, but due to security (property on loan), it becomes easy for the bank to provide a loan at a lower interest rate. Therefore the most significant threat for all lenders is what if borrowers fail to pay the loan? But with home loans, the lender can sell off the property to take the money back, which imposes the bank to provide loans at a lower interest rate.
Ease in Repayment:
You are not required to pay the amount in one go. Suppose you take a loan from a bajaj finance home. You can pay off the debts in monthly installments. The amount of monthly installments never creates peer pressure if you have a stable financial condition. The period which has to be chosen for repaying the loans is based on the age and the years left for retirement.
Benefits in Tax:
Individuals who take out home loans are eligible for income tax benefits. The amount of tax that must be charged to the government is reduced because interest payments are excluded from the total income tax amount.
Disadvantages of House Loan:
Though we have seen the advantages, it’s time to look after the drawbacks that a person faces if any mischief occurs while taking or borrowing a loan from a lender. When you analyze your terms for making a decision, you need to know the wrong side. Just listening down the advantage and imaging vision is not sufficient. You need to address every point before taking a decision. Time to discuss the disadvantages:
Interest:
Even though the home loan interest rate is less, you pay more than you borrowed, and always remember this. So if you decide to sell your property, you might be at a loss because of the principal amount along with the interest you need to pay, which is merely too high. And this is one of the most significant disadvantages of loans that can be considered.
A Long-term Commitment:
Another drawback is that taking out a home loan entails a lengthy repayment period. People are unable to take out any more loans during this period because they will be required to invest their entire income on loan repayment. As a result, before taking out this loan, one must be prepared to make a long-term commitment. Due to amidst the covid-19 situation people are really tensed about this fact because they are required to pay the amount but due to such concerns, there are chances that people have to face critical problems like job loss, reduction in income, etc.
Loss of Opportunity:
One of the most significant drawbacks of a home loan is the loss of opportunity. An individual cannot expect to benefit from a home loan. Heavy returns can be gained by investing the same amount in another financial instrument. It might sound a bit strange, but if you think owning a home from a loan will give you profit, your expectation will not be upto the mark, so it is better to invest in terms that can give you long-term benefits.
Comments