The Pros And Cons Of Home Loans

  • Added:
    Feb 12, 2014
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The Pros And Cons Of Home Loans Photo by Aishwarya Mahurkar

A home loan, like any other financial transaction, has its own advantages and limitations, which is no surprise. However, what would surprise most people is that home loans can be used strategically to benefit your financial health. There are a few elements of the housing loan that can greatly affect your monthly cash flow and cause significant trouble in your paradise. Hence, you need to make the right choice to enjoy rich rewards.

How do you ensure that you enjoy all the benefits of housing loans ? You can reduce the amount of your taxable income by paying regular EMIs. The best way to go about this is to arrange your income, investments and EMIs strategically so as to minimize the due tax. If you apply jointly for your home loan along with your spouse, then both of you will be able to use this to your advantage.

Most of us are not in a position to utilize all our savings to buy our first property. Thus, housing finance companies provide easy home loans  these days in order to allow individuals to purchase their dream home. This advantage is tied in with another unique benefit. The rent that people pay to live in someone else’s house is very similar to the EMIs that they would need to pay to possess a house. Most investors rent out their place in order to help themselves to pay the EMIs comfortably. If you can afford the rent, then you can afford the EMIs too. In other words, if you take the effort to meet the home loan eligibility criteria and complete the home loan process, you can have your own house. You can pay the EMIs to the housing finance company instead of paying rent to the landlord, thus enjoying the several benefits of owning a house such as capital appreciation.

The disadvantages of housing finance could be found in the contract document. If you have not customized the home loan to match your financial requirements, then you could land in serious financial trouble. For example: Whether you choose floating or fixed interest rates, the company can change them over a period of time. In other words, it can convert your EMIs into an amount that you can’t easily mange every month. The most common problem with interest rates is that you cannot anticipate or control this change.

In addition, there are several other factors such the fine print of the contract that can be a potential financial landmine. Could you pay a larger amount and finish this loan sooner? It may not seem so, unless you have ensured that while signing the contract. A professional finance expert can help you to take a suitable home loan. You might require this kind of help to create a contract to safeguard your interests.

Author's Profile

Aishwarya Mahurkar is an experienced writer concerning the finance industry. Her articles help in informing her readers of the benefits of housing loans and the easy home loans.

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