Why Buy a Home with a Loan Instead of Using up your Savings?
For majority of Indian families, buying a house is considered to be a sign of settling down and success. However, with the sky-high real estate prices in many Indian cities, affording a home solely with their savings becomes extremely complex for a lot of people. This is where home loans can be of huge help. Best housing loan companies in India offer financing at budget-friendly interest rates, hence making it simpler for people from varying backgrounds and income levels to buy or construct a house of their home. Many people opt to take home loans rather than empty their bank accounts, even though they have enough money to buy a property outright with their savings.
Here are a few factors that make taking a loan to buy a house preferable to using your own money:
Having Emergency Savings is Important
No matter whether you take a home loan or pay for a house with your savings, it is vital to have an adequate amount of money available in your account at all times for financial emergencies. These emergencies cannot be predicted and may become a huge problem if you don’t have enough cash in hand. Medical emergencies, losing a job, having to replace an important home appliance, and facing financial strains in business are some of the common reasons why one might be in sudden need of lump sum cash. Hence, rather than spending all this money on your property purchase, it would be a smarter move to keep an emergency fund. You may even use this money to build your retirement corpus.
Explore Better Property Options
People nurture the dream of having their own house from a very young age. Therefore, when you ultimately reach the age where you can turn this dream into a reality, you will want to buy the very best home for your family. But if you choose to use only your savings for this purchase, there is a good chance that your options shall be quite limited due to budget constraints. On the other hand, you can get a loan of up to INR 50 lakh from a bank or NBFC, which would be enough to get a spacious home where you can happily grow old with your family. The loan has to be repaid in small instalments or EMIs and is unlikely to be any such financial burden.
Improve your Credit Score
Paying the EMIs of a home loan in time can be advantageous in improving your credit rankings. A good repayment loan record would help you to get approved for various other loans in the future, starting from education loans to car loans.
Go for NBFCs
Home loans can be acquired through both banks and non-banking financial companies or NBFCs. It would be a smarter choice to go for the latter option as it has less stringent eligibility criteria and prompt loan disbursal. Even a person with no prior credit history can take a home loan through a leading NBFC like Capri global housing finance. Such NBFCs offer home loans for multiple end uses. You can buy an already constructed home or residential plot with such loans, or even construct a home on a property you already own. Many NBFCs even offer loans for renovating or expanding a house.
End Note
While having as little debt as possible, ideally none at all is required for financial prudence. However, borrowing money to cover the cost of a house purchase may be a better option than depleting your savings. Similarly to this, you have the option of applying with an NBFC if your house loan application is rejected by banks and you urgently need a loan.