7 Benefits Of Taking Home Loan In 2023

Nov 17th 2023
7 Benefits of Taking Home Loan In 2023: Your Path to Financial Freedom

Benefits Of Taking Home Loan, Buying a home is a dream of many folks around the world. It is not just a dwelling to live in but it is also a status of a person’s success and maturity. This is why people want to invest their hard-earned money in a property they would love to showcase to others. Since, a home is a high-value element, it is not easy for a person to buy a home outrightly. Instead, most people choose to take a home loan to finance their home-buying needs.

A majority of people think that to buy a home they must need to take a loan and most of them consider it a liability. This is not the case every time. According to financial experts, a home loan is not a liability but a wonderful opportunity to enjoy several benefits. Yes, not many people know but buying a home loan comes with loads of benefits. In this post, you will get to know each one of them in an understandable way.

What Is A Home Loan? 

Define home loan, A home loan is considered a secured loan which is availed by a person to finance a home. In a home loan, the property purchased works as a collateral against the home loan. As compared to other types of loan like personal loan, car loan, bike loan, business loan, a home loan comes at much reduced interested. The home loan is repaid by the borrowers in the form of equated monthly installments (EMIs) for the chosen loan tenure.

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What Are The Major Benefits Of Taking Home Loan?

Now, comes the main point – the benefits of availing a home loan. From getting attractive interest rates to improving the CIBIL score, availing tax benefits, there are numerous benefits of securing a home loan in today’s times. In this post, we will cover each of them in the following section’.

Affordable Interest Rates

As already mentioned, a home loan is a secured loan which means one can get it at attractive interest rates. A home loan is always affordable than other types of loans particularly a person loan which comes at much higher interest rates. Lower interest rate means lower EMIs that make home buying much affordable.

Attractive Property Rates 

In today’s fast-paced world, property buyers can enjoy numerous options in in the home loan category. For example, they can enjoy dual – the borrower can choose to buy a bigger home or buy a property at a lower price than what was planned. The next point is that the borrower can relish other perks of buying a home with a home loan like tax savings, lower down payment in the beginning and taking a top-up loan, prolonged loan repayment period, etc.

GST Benefit

You should be happy to know that the GST (Goods and Services Tax) rates against the buying of a property have been reduced significantly by the government of India. At present, there is zero input tax credit (ITC) levied and the GST rate on the acquisition of residential properties is 5%. A borrower can benefit from these lowered interest rates and buy a property now.

CIBIL Improvement

Since home loan is a secured loan, many people take it to improved their credit score (CIBIL). If you have low CIBIL score and are unable to get a personal loan, you can prefer to take a home loan at attractive interest rates as the property would be placed as a collateral. By paying your home loan EMIs in a sensible manner, you can increase the likelihood of your Cibil Score Improvement Agency.

Tax Savings

Tax Savings meaning, If you file ITR every financial year, you can become eligible for deduction in the claim for the overall home loan amount interest deposited under Section 24B of Income Tax Act.

Balance Transfer Facility

If you already have a running home loan from a bank or a financial organization where you have been paying higher interest rates, you can choose to transfer that home loan to another lender and avoid paying higher interest rates in the form of surged EMIs.

Rent Savings

For those who have being exorbitant rent for months and years on a rented property, it is advisable to buy a property to save that money and pay the home loan EMIs. Most experts recommend buying a property than living on rent.

How To Apply For Home Loan?

In a country like India, banks and other financial organizations offer home loans to borrowers at affordable interest rates. Though every bank has its own home loan application procedure, most of them follow a common procedure when it comes to applying for a home loan.

For those looking to avail a home loan, it is necessary to know that applying for a home loan has become extremely easy in today’s digital times. For example, you can apply for the same by visiting the bank branch, visit the bank website, or even download a mobile app.

Below is the process to Apply for Home Loan today.

Step 1:- Fill out the application form for home loan

Start with filling out the home loan application form. Most banks have an easy-to-understand application form that can be either filled through the bank visit or apply for a home loan digitally. The following details would be submitted:

  • Name
  • Address
  • Contact details – phone number and email ID
  • Education
  • Type of employment – salaried or self-employed
  • Annual Income

Step 2:- Paperwork

After you provide the basic information, you will need to attach the below documents for verification:

  • Identity proof – PAN card/ Aadhar Card / Voter ID/ Driving license
  • Address of proof – can be a copy of any utility bill
  • Salary slips of the last 3 months
  • Proof of employment
  • Bank statements of the last 6 months
  • Form 16

Step 3: - Verification

Home Loan Verification Process, Your application for a home loan is started processing by the bank the moment you submit the form and all the necessary documents. The bank will go through every submitted document. To get this doen, a bank representative could even come to your office or existing residence.

The following stage is to determine whether you are a creditworthy borrower. The bank thoroughly investigates your credit report. Consequently, it's crucial that you keep a solid credit history.

The bank will move on with processing your loan application if all of your paperwork is in order and you have acceptable credit information and a score.

Step 4: - Loan Sanction

The bank will furnish the borrower a sanction letter after your home loan application has been approved. This letter is used as evidence for loan authorization. This letter includes all relevant information on the loan transaction like interest rate, loan account statement, loan tenure, monthly EMI, foreclosure charges, etc.

Step 5: - Loan Disbursal

The submitted home loan application will be accepted if the bank is okay with all the formalities. A letter of final agreement will be sent to you. You will receive a welcome package and a detailed home loan EMI schedule when the loan has been disbursed. 

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The Conclusion

Be it any residential property, taking a home loan is undoubtedly a reliable way of arranging funds for property buying. This way, you can buy your dream home easily and quickly. Today, all major banks and financial organizations offer attractive interest on home loan. All you can do is to compare all the home loan options and choose the one that matches your needs the best.

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