- Buying vs renting a home
- Pros of buying a new home
- Cons of buying a new home
- Tips for buying a home
- Home loans for buying a new home
- Tax benefits of home loans
Buying vs renting a home
When it comes to housing, you have two options of picking a home – renting and buying. Which, of these two options, do you think is better?
Renting a home is feasible if you don’t have sufficient funds in your hand to invest in a house.
Moreover, if you relocate frequently, renting is a better bet. Owning a home, on the other hand, is beneficial since you can create an asset for yourself and your family. Even if you don’t have considerable funds, you can always opt for a home loan to buy your own dream home.
You should consider your current income, financial standing, existing debt, asset liability ratio and affordability before you decide to buy a house. Moreover, the following pros and cons of buying your own home should be considered –
Watch the video as we explain the basic concept of buying vs renting a home
Pros of buying a new home
- Creation of an asset
- Legacy for your family
- More privacy
- No hassle of dealing with landlords or uncertainty of accommodation
- No compromise on designing the home
- Long term investment
- Home loans give you tax benefits
Cons of buying a new home
- Considerable upfront cost even if a home loan is availed
- Recurring EMIs might prove to an added expense
- Reduction in mobility
- Lower disposable income if you have started your career
- Additional maintenance costs
Even though buying a home has its drawbacks, it proves to be a wise decision in the long run.
Tips for buying a home
When you decide to buy a house, it is an emotional decision and you should ensure that you have considered all relevant factors before choosing your dream home. These factors include the following –
- Convenient location
- Approved builder
- Cost of the house
- Area of the house
- Shopping around for home loans
- Checking the terms and conditions of the property
Buying a home might be a one-time decision and since it involves a considerable amount of money you should be careful when choosing a home.
Here is a complete guide on financial planning which will help you in the process of financing your home
Home loans for buying a new home
Very few individuals can procure the entire cost of buying a home and this is where a home loan comes into the picture. Home loans give you funds to buy a house of your choice without putting a big dent into your savings. The benefits of home loans are as follows –
- It is a good loan because it boosts your credit score, builds your credit history and gives tax benefits
- It helps in funding your dream home easily
- It is quick to avail and you can get the funds easily
- The loan can be used to finance up to 90% of the cost of the home
- The loan is available for buying a ready home, under construction home or even a plot of land
- You can avail a home loan for reconstructing an existing home
- Home loans are affordable with a low interest rate
Want to learn more about debt management, read a complete guide on how to manage your debts effectively.
Tax benefits of home loans
One of the primary benefits of home loans is that it offers tax benefits. Let’s understand these benefits in details –
|Income Tax Section||Benefit available|
|Section 80C||Principal repayment of the home loan is allowed as tax deduction from your taxable income up to Rs.1.5 lakhs|
|Registration charges and stamp duty paid on the loan are tax deductible|
|Section 24(b)||Interest paid on a home loan is available as an exemption up to Rs.2 lakhs|
|Section 80EE||If you are a first time home buyer, interest paid on the loan would be allowed as a deduction up to Rs.50,000 in addition to Section 24(b)|
|Section 80EEA||If a home is bought up to 31st March 2020 by a first time home buyer and the stamp duty cost of the home is up to Rs.45 lakhs, additional deduction is available on the interest paid on home loan. The limit of deduction is Rs.1.5 lakhs over and above the limit under Section 24(b)|
Watch the video as we explain the basic concept of how you can save tax on home loans
So, buy your own home with a home loan and get tax benefits as well as build your credit score. Understand how to choose a dream house and then invest in one.
For a complete guide on buying a house, you can take this course to understand the various aspects of buying and owning your home rather than renting it.