Home Loan vs Cash Payment: Which is Best for Dream Home?

Arwind Sharma By Arwind Sharma, 6th Mar 2018 | Follow this author | RSS Feed | Short URL http://nut.bz/2upxxvc5/
Posted in Wikinut>Business>Accounting & Finance

Buying a Home is a dream for everyone but the problem is that not everyone can afford to buy a dream home that's why taking a loan is always a god decision

You might have found a home that you would like to purchase. Now you need to make the big decision. Should you pay in cash or avail a Home Loan? Is a Home Loan application process really worth it? Or is a cash payment simply the best solution?

This is the question that many people struggle with, when planning to buy a new home.

If you’re confused about what you should personally opt for, then look no further. Here’s a breakdown on the pros and cons of both the payment methods, and which ones you should go for, and why.

If you’ve settled your mind for a cash payment, then read on to know the pros and cons. If you’ve already decided to get a Home Loan, then have a look at an online Home Loan eligibility calculator to determine if you’re qualified to get one.

After all, if you’ve put so much thought into picking a home. Paying for it shouldn’t make you compromise on your recurrent expenditures or anything else that you have thought of.

Cash Payments

Ask any real estate builders and they’ll tell you that cash payments are the right way to go. This might raise a few questions and many red flags. After all, paying such a huge sum upfront isn’t easy. Obviously, if you’ve ever considered cash payments for a Home, then you might have been saving up for quite some time. Yet, it’s a difficult thing to do unless you’re buying an really inexpensive apartment.

Here are a few benefits and drawbacks of cash payments.


a.) Living a Debt-Free Life:
This is the most straightforward reason to opt for cash payments. You’ll live a relaxed life, with no hassle of EMI payments.
b.) Better Deals: With the cash at hand, you’re liable to deal with the dealer directly, and negotiate better payments and deals. This is better compared to paying in down payments and instalments.
c.) Better Financial Security: When paying in cash, only you and your direct relatives are involved. Once the payment is done, you’ll own the house completely with no leverage. However, with a loan you’ll have to worry about making payments to the bank or NBFC. And if an untimely demise occurs, then your direct family has to deal with repayments.


No Tax Benefits: Payment for your mortgage is deductible as income tax. This deduction lowers the interest rate at the time of repayment.
No Liquidity: It’s simple logic that if you use up all of your cash for one investment and you’ll be left with none for other commitments. So, you can’t even think about purchasing a car, or any other kind of investment, since all your funds are liquidated for a house.
Real Estate Convertibility: The current state of the real estate market is such that once you buy a property, reselling it can become problematic, if you ever consider it. Investing all your assets in something you cannot convert is risky.

Home Loans

Most Indians turns to a Home Loan when it comes to purchasing a home. At first, cruising through the Home Loan market may make it seem like a problematic thing. After all, Home Loan interest rates aren’t here to make things easier for you. But, nonetheless, it has its perks.


Tax Benefits:
The best Housing Loan in India is one that gives you the tax benefits that you can capitalize on. The Home Loan tax benefit is for the interest that you pay during repayment. The Income Tax Act of 1961 allows a deduction of a maximum of Rs. 150,000. This is applied on the total interest that’s payable on your loan.
Liquidity Benefits: This cannot be overlooked. Banks/NBFCs help you to pay for your home. Doing so you’ll still have assets that you can funnel in to furnish your new home, buy a new car, and investment in other avenues.
Capital Returns: You can always set up your home for rent, and slowly get back whatever your EMI, or outstanding loan repayment amount is. This makes repayment easier rather than simply liquidating your assets, and using up all your cash for a home.

With all such benefits, a Home Loan is definitely a safer option to choose. Besides all of this, it’s easy to avail a Home Loan these days. Most applications for Home Loans are applied online, and you get it approved within a couple of business days. Apply for a Home Loan online and buy your dream home today.


Home Loan, Housing Loan, Housing Loan Eligibility, Housing Loan Interest Rates In India

Meet the author

author avatar Arwind Sharma
Arwind Sharma a passionate writer on finance and closely associated with financial companies. He is still busy in discovering time-efficient finance schemes. To know more about Loan against

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