Why Home Loan is the Best Saving Plan for You?

Posted by mymoneymantra on May 9th, 2018

There are times when you may have some spare money, and you don’t always know what to do with it. There are so many options such as fixed deposits or investments. Most people choose to put this excess money into a savings account. Have you ever stopped to think about exactly how beneficial this is for you? Everyone is aware that a home is a significant investment. However, a Home Loan could be an even better place to invest your spare cash. Especially in the current environment where the savings account offers ultra-low interest rates.

Savings accounts have low returns and are fully taxed

The interest rates for a savings account can range between 3 and 6% and can usually be for a short time only. Besides, you would also have to pay tax on the interest that you earn from the savings account. If you are a high earner, then there are chances that you would lose almost half of the amount concerning cash.

As per the Indian Income Tax laws, the interest you earn from a savings account is also considered as income, and it is added to your gross income. Therefore you are taxed on this amount along with your salary or other forms of income according to the income tax slabs that you come under. There are no deductions or exemptions that are available for interest that you earn from a savings account.

Home Loans offer you tax deductions

Your principle amount, as well as the interest that you pay on your Home Loan, allows you various tax benefits. There are two principal amounts that you must consider while paying back your Home Loan. The first is the primary amount which is the amount that you had initially taken on loan from the bank and the second is the interest amount. This is the additional amount that you pay for the principal loan amount taken. This interest depends on the rate of interest on the loan that you have chosen. This rate of interest can range from 8.45% to 11% (as per current market rates). However, the good news is that you will be able to avail tax benefits on both amounts.

• According to Section 80C, a person can claim the principal amount paid to the bank as a tax deduction of up to Rs. 1,50,000 per year. This amount is even higher for a senior citizen as they can claim benefits of up to Rs. 2,00,000. This entire amount is essentially tax-free.
• As for the interest paid under Section 24 the annual interest paid against a loan is exempted for up to Rs. 2 Lakhs per year.

Property is an appreciating asset

The cost of homes and other property is continuously on the rise. The longer you wait to buy a house the costlier it gets. This is a significant reason why you should think about investing in a home right now. Even if you already have a home, you can buy a second home and get the same benefits for a Home Loan. The value of this home will only keep increasing, and if you plan on selling it later you can do so at a higher price which would, in turn, be much more profitable to you.

Home Loan is a money-wise investment

When you have a savings account, it is like cash in hand. No matter how much you try to control your expenditure, there are times when you will use the money just because you have it. This results in the amount reducing with every purchase. This not only reduces the amount of money that you have in the bank which would also reduce the amount of interest that you would have got later in the year. In the case of a Home Loan, you not only gain an asset in the long run but you also get into the habit of living within your means, and once you finish paying off the loan, you will still be able to save any excess money easily.

Taking the Best Home Loan for you makes more sense if you have a bit of excess money than putting that same money into a savings account. If you need the money, you could always take out a top-up loan on the initial amount, or you could also sell the property and pay off the loan before time while still having excess money that you can use for yourself. You do not even have to have a very high amount of an initial investment to start off your loan. You can always contact MyMoneyMantra’s Mortgage Specialists to Check Your Home Loan eligibility and avail the benefits of a Home Loan.

Also Read: ICICI Bank Home Loan Balance Transfer: Benefits, Eligibility, and Process

To apply online for Credit Cards, Secured Loans and Unsecured Loans, visit www.mymoneymantra.com, the leading online lending marketplace that offers financial products from 60+ Banks and NBFCs. We have served 2 million+ happy customers since 1989. 

Talk to our Loan Specialists toll-free at 1800 103 4004 to know more about our products and offers.