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Can a Home Loan help you more than just owning the property?

A home loan is crucial for many individuals as it provides them with financial assistance to purchase a house.

Benefits of Taking a Home Loan

A home loan is crucial for many individuals as it provides them with financial assistance to purchase a house. Furthermore, there are different types of home loans that can be availed based on specific purposes.

In this article, we will discuss types of home loans and their benefits.

One of the most common ways by which you can fulfil your ambition of purchasing your own home is via a home loan. A salaried individual with a good credit score and a good income can easily obtain a home loan to purchase a house.

A home loan typically has a long tenure of around 10-30 years, depending on the loan amount and EMI. Once it is disbursed, you can start paying the monthly EMIs to begin your repayment of the loan.

Did you know that there are different home loan types? Before we delve into the benefits of a home loan, lets have a look at the types of home loan offered by lenders.

Different Types of Home Loans:

1.Land Purchase Loan: Instead of purchasing a house directly, people can get a land purchase loan to buy a plot and then construct a home on it as and when they please. Even if a person doesn't build a house on the land, for now, he/she can still lease the land and earn a good income through it.

2.Home Renovation Loan: If you wish to renovate or repair your existing home, then you can get a home renovation loan to get the necessary funds. Renovation may be external or internal repair jobs, house painting, electrical overhaul, etc.

3.Home Construction Loan: Some home buyers refrain from buying a pre-constructed house since they want to make their home according to their own plans and wishes. For this purpose, one can get a home construction loan that can cover the cost of building a home loan. A home construction loan typically also includes the cost of the plot.

4.Home Extension Loan: If you already have a home and only wish to alter the house or make certain modifications like extending an additional bedroom, building an extra balcony or similar constructions, then you can avail a home extension loan to fulfil these needs.

Benefits of taking a home loan

Getting a home loan is one of the most cost-effective ways to purchase a house. Many home buyers are in a dilemma whether to buy a house using their own saved funds or get a home loan.

Most individuals get a home loan due to a lack of availability of funds that are required to buy a house. But that does not mean that if such funds are readily available, one should not consider taking a home loan. The simple reason for this is that a home loan offers plenty of benefits that can help a person save money.

Let's look at some of these benefits in detail:

Tax benefits of a home loan

Rather than putting in your entire savings to buy a house, you can get a home loan for the same and save on taxes. Your own funds can then be invested in various financial instruments that can help you earn handsome returns. In this way, you can buy a home and save taxes using a home loan, and at the same time, earn good returns on your existing savings.

Liquidity Advantage

If you use all your funds to purchase a house, then you may face a cash crunch in difficult times. Thus, it may be better to keep your own funds for lifes uncertainties and get a home loan to purchase your house.

Reduced Risk

When you get a home loan to purchase a specific house, the lender does their due diligence with regards to the property in question.

They will go through the property documents, legalities and any conflicts and only then approve your loan. This protects you from falling into the trap of purchasing a questionable property. It is safer to buy a home that is already approved by the lender since they have performed their due diligence on the same.

In this way, purchasing a home using a home loan can be very advantageous. Even then, it really depends on your specific situation.


You can most definitely purchase a home using your own funds if you feel you have enough additional funds for contingencies and other financial goals. If you are averse to taking on long-term debt, then too, you may choose to buy a home with your own money.


The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.

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