How Do Home Loans Help You Invest Better?

Do you want to invest in real estate? Your pocket is not cooperating? What about taking a home loan? Scared? Your brain is blowing an alarming siren? You may drown in debts!

There is nothing to worry about. Fearing home loans is an old school of thought. Today’s generation is smart enough to think differently. By borrowing money to buy a property, you can become a better investor. How? Let us have a close look.

1. Getting the Benefit of Leverage:

It may take your entire life for you to save enough money to buy a property. Whereas, by opting for a home loan, you can do this instantly, just by paying 10-20% of the total price. The bank will pay the remaining 80-90% as a loan.

Later, when the property price increases, you will reap the benefit from the entire cost price and not only for the percentage you paid. In return, you must repay the amount you borrowed along with EMIs. The best part is that the EMI amount is not proportionate to the rising price of the house you bought. It is calculated on the cost price.

2. Saving Money From Tax Deduction:

The Indian government has made the process of taking out home loans even more beneficial. You can claim a deduction on your income tax with these loans.

• Under section 24(b), you can get a tax deduction of up to INR 2 lakhs on the amount of interest paid.

• Under section 80C, your tax deduction will be up to INR 1.5 lakhs if you repay your principal.

Hence, the EMI burden naturally reduces, and you can now invest in other areas, including stocks, bonds, fixed deposits, and more, almost like ordering a delicious sweet like laddu and finding that it is calorie-free.

3. Building Assets While Tackling Inflation:

Inflation is way beyond control. Despite this, investing in property can be immensely profitable. It serves as a thorny hedge that stops intruders. In this case, inflation is the adverse force that home loans can save you from.

Additionally, your EMI will not change while your income from rents increases with inflation. It means your debt burden will reduce over time if you keep tenants. Moreover, inflation increases your property value. So, after some time, if you plan to sell the same, you will gain a massive profit.

4. Making Clever and Effective Investment Plans

When you do not spend your entire savings on buying an asset, you save some money. Now, if you invest this amount partly in a mutual fund or start a business, you get the opportunity to earn. So, it opens the room for you to make more money than what you are paying for a home loan and EMI. It will not only reduce your debt burden but also open a new horizon for you to opt for a better living.

Thus, borrowing money to purchase a property is not a red siren at all. Instead, if planned strategically, it can prove to be a useful wealth-building tool for you. However, do not borrow a sum that may be difficult for you to repay. So, if you are smart enough, this loan can be a blessing in disguise.