Should I Save First Or Take A Home loan Today?

home loan

Everybody wants to own a house. That is the first thing that you think about after you get a job and get married. As you start thinking about a house of your own, you begin to wonder whether you should save money and then buy a home or you should opt for a home loan from a bank. This is because everybody will tell you that it is not a good idea to carry debt. However, it is important to have a clear understanding because this will be the biggest financial decision in your life. Read on to know more.

Buying a home by paying cashThe cost of an average house in India ranges from Rs. 30 lakhs to Rs. 100 lakhs, depending on where it is located. If you have sufficient bank balance with you, paying cash and buying a home does away with the need to pay any interest or other costs. If you do not have that kind of money lying around and you are dependent on your salary or business income, then taking a home loan may be a good option. You will not feel any financial stress as you can repay the loan in equated monthly installments over a period of up to 30 years. But then, you will be in debt for a long period of time.

Now, another aspect that you have to take into consideration is the real estate price increase. Property prices have increased tremendously over the last few decades. The prices of properties will further appreciate. On the other hand, the value of money has sharply fallen. Now, the question you have to ask yourself is how long you will take to save the money you need to buy the house that you want. If your answer to the question is that you will need several years to save the required amount of money, then it makes sense to go for a home loan. This is because you will get only less for the same amount as the value of money will come down further.

Rent Vs EMI

Living in a rented space has some uncertainties. The rent may go up. You may be asked to shift. You cannot make changes or decorate as your wish. You definitely have to take good care of the place. When it’s your own home, all your efforts are more meaningful. The amount you use to pay rent can be utilized to payback your loan. You would not have to look out for a place if your landlord suddenly increases your rent or decides to sell his property.

Advantages Offered By Home Loans

  • It gives you a sense of accomplishment.
  • The value of property always goes up. Capital appreciation of your property has the power to shield you against inflation in the longer term.
  • Lower interest rate compared to other loan products.
  • Tax deduction up to the specified extent on the principal and interest payable on your home loan

Summarizing, you should have your priorities clear and take a pragmatic approach when it comes to buying a home. Most people in India make use of the home loans offered by banks and other financial institutions. You can find more information at

AUTHOR: Sini Mathew
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