What a person dream? A home, food, and cloth. It is a big thing to make your dream home. With all these high property rates it is difficult to buy a home with what savings you have.
Actually, a home loan is the biggest liability because the loan amount will be high and for a longer tenure period. Where taking home have some advantages which are
A home loan tenure period can be as long as 10 years or more. In this period you can see many up and downs in interest rates. The falling of interest rate may give you chance to repay your loan amount. In the early period many took the home loan at higher interest rate like 15% and above but in last one decade it came to 8% that is very much less than previous and rising property rates gives them double benefit. You need to actively manage your home loan. It sounds difficult but it is not.
Tax Benefit-interest paid
You can save your tax up to 1.5 lakh as per section 25(b) of Income Tax Dept. The benefit on interest rate can be claimed while computing the income from house property.
Buying a home and renting a house
To make this clear we will compare two individuals. Ramesh wants to buy a flat at a current price. Where Venkat prefers to live in a rented house.
Let say, Ramesh fund the flat cost Rs. 35 lakh and he pays 10 lakh from his savings and RS. 25lakh he taa kes loan. He can pay Rs. 25000 as EMI. If he is in 30 percent bracket tax payers then he can save tax on interest paid.
Assuming after 20 years the Ramesh property rate becomes 90 lakh. He makes a profit for him. But in Venkat case, he pays 10000 per month as rent and every year owner make changes in rent. But he will be leaving he doesn’t have any asset and if he buys a flat after 20 years it will cost him 90 lakh. From both ends, he is in the loss.
Ramesh got a much better deal than Venkat. So buying a house will always pay off.
Buying a home is one of the biggest financial investment you make in your lifetime. In the last 10 years, property prices are at their boom and touching the different level of height