Purchasing a home is a rather big step. However, with the rise in the property prices, it is becoming exceedingly difficult to purchase a house. Buying a house comes with a lot of responsibilities and anxiety but does bring with a sense of accomplishment. With such soaring prices, almost all of the people these days have to opt for a home loan. However, most of the people consider a home loan as a liability because of the huge amount and the time period involved.
However, the home owners loan corporation offers certain benefits which are actually very advantageous. Listed below are some of the advantages of taking a home loan.
Appreciation of the Capital
The prices of the property have boomed over the past few years. This means that no matter at what price you purchase the property today, it is ought to increase after a few years. You can be completely sure of this as the prices of the property never actually depreciate. The soaring prices of the construction, labor and rent have caused a rise in the prices. This means, that when you pay off you loan, your property would be worth almost the double of the loan amount. This would also protect you against potential inflation in the long run as you would have the chance of selling your property at a relatively higher price than you actually bought it for.
Helps To Build a Good Credit Score
One must have a good credit history and mortgage is a great way to build one. A mortgage is known as a good debt as it is tied to a physical asset, unlike the bad debt. Taking a mortgage would result in a slight dip of credit score immediately but after a period of 6 to 12 months, the score would increase if you make your monthly payments on time. Having a history of paying the EMI’s regularly shows that you are capable of paying back on time. As you keep making your monthly payments, your score would keep increasing. This would show that you are financially capable.
One of the primary benefits of taking a loan from the home owners loan corporation is the tax benefits. There are 2 kinds of benefits that you would get, namely basis of interest payment and repayment of the principal amount. The interest payment provides a deduction of interest on the amount that has been borrowed to purchase the property. The great thing about this is the fact that it can be claimed for both the residential as well as the commercial property.
The principal repayment, on the other hand, offers you to avail the deductions on the payment of the amount that has been borrowed. This amount is deducted from the gross total income of the borrower. This is especially beneficial for the people who have their spouse as a co-applicant for the loan. This say you both would separately be eligible for the tax benefits.
Purchasing a home is actually one of the biggest investments that you would make in your lifetime. Therefore, each and everything must be carefully understood before going ahead with anything.