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Home Loan in India Is an Inevitable Need? Explained!

The ongoing pandemic has brought substantial changes in people’s lifestyles. While many multinationals are shifting to permanent work from home or two or three days work week, people are moving to bigger and better homes. The prolonged working hours and the need for a comfortable workstation have led to an increase in home loan borrowers. According to a real estate brokerage firm, there has been a rise of loan applications across cities by 20-40%. What makes people rely on housing finance to buy their dream house? Time to find out.

Why Is a Home Loan an Inevitable Need in India?

With high real estate prices, it is difficult for many to buy a house with one’s savings. Home loans, on the other hand, seem a better option. Through home loans, borrowers can move into their dream home and repay in comfortable EMIs. Following are some of the advantages:

  • Lower interest rates

If you plan to borrow money for buying your house, a home loan is probably the best option. Being a secured loan, it has lower interest rates than other types of loans. Moreover, unlike other types of loans, there are no prepayment charges on a floating interest rate home loan. Therefore, if you have surplus funds, you can easily prepay the loan and reduce your debts.

  • Tax benefits

One of the biggest tax-saving instruments, home loans, help reduce your taxability. You can claim tax deductions from your income for repayment of home loans. A tax deduction is available on the interest repayment of up to Rs 2 lakh under Section 24(b) as per the Income Tax Act, 1961. Similarly, you can claim a tax deduction on the principal repayment of up to Rs 1.5 lakh under Section 80C.

  • Liquidity of money

If you exhaust all your savings on a home purchase, you could face a financial crunch in future. Availing a housing loan saves you from that risk. You can utilise your liquid cash for other financial needs while using a loan to buy your dream home. Moreover, you can also utilise liquid funds for investments. A diversified portfolio can help you earn profitable returns and even help you repay the loan comfortably.

  • Building your credit score

Repaying your housing loan timely can help build your credit score. A good credit score is vital when you need loans in future. A credit score of 750 or above is considered good and can enhance chances of loan approval.

  • Thorough research by the lender

It is crucial to do thorough research of the property you are purchasing, be it the legality or the accurate valuation of the property. However, it could be difficult to do that research yourself. Taking a home loan helps. Lenders carry out extensive due diligence before approving a home loan application. They ensure that the property is secure and has all the necessary approvals.


With life uncertainties, it is not usually a viable decision to exhaust your savings for purchasing a house. Instead, a housing loan helps in buying your dream home while allowing you to repay in comfortable monthly instalments. Moreover, with the seamless online interface of most lenders today, you can apply for home loan within the comforts of your house.

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