The wonderful benefits that are associated with a home loan currently make it a great option for earning individual to make an investment as well as save on taxes. By leveraging the amount that people already have they can now afford to buy much larger houses using the easily available home loans. Even after the complete repayment which may take up to 20 years there is still a huge amount that is gained through the home loans. There are advantages and disadvantages associated with staying in a rented house and buying a new house with a home loan.
Staying in a Rented House:
There are a few benefits of staying in a rented house over buying your own home in certain circumstances. These are:
- The rent amount is always lesser than EMI of a house loan.
- There is freedom to move to different places until such time that you make a final decision to settle down.
- There is no botheration of maintaining your own house which you may have to give on rent to someone else when moving out of town.
There are also a few associated drawbacks of continuing to stay in a rented accommodation, especially when one has the capacity to buy his own.
- The amount paid towards rent is money that is given away forever without any future benefits attached to it.
- There is brokerage charges associated with taking new accommodation on rent every now and then.
- Unless one has his own home there will be constant shifting as a continuing botheration.
- In some places one has to give huge amounts as security deposits which do not earn any interest at all.
- There is no tax benefits that can be availed on the amount paid towards renting a house.
Buying your Own Home with a Home Loan:
This is an idea that is preferred by most middle class Indian who associate owning a house with family pride and self esteem. The advantages that come with having your own home far outweigh the disadvantages or problems that one may face in the process.
Benefits of buying a home with a home loan:
- One can plan to own a dream home even in the early stages of earning career when one does not have adequate funds by taking help of a home loan.
- It is smarter to use the monthly income to pay EMIs of a home loan and own a house for all times to come rather than pay rent which has no future value.
- You pay a small price for a property whose value is definitely going to increase in years to come.
- There are a host of tax benefits that come with a home loan thereby increasing the total money saved by buying a house with a home loan.
However there are some small problems which are inherently associated with the idea of buying a house with a home loan:
- The EMI will definitely be much higher than the amount which one pays towards rent in a month.
- When the buyer shifts town due to job related or other reasons it becomes quite a headache to continue maintaining the house. The rentals that one gets from a house will never be same as the amount that has to be paid out every month as EMI towards the home loan repayment.
- A large amount of money has to be paid out as down payment for the home loan which may erode the savings of the borrower.
Each individual has to decide the time for himself when the option of taking a home loan becomes more sensible in financial terms as per his prevailing conditions.