Home loan is a long term loan. It is often seen that people take home loans in the initial days of their career. With time the income increases and the person taking the loan gets so much money that he can easily repay his entire home loan. But before taking any decision on repaying the home loan, some things should be kept in mind, because there are many benefits which are available only on home loan.
Many types of tax benefits are given by the government on home loan. If you repay a home loan, you get an income tax exemption of Rs 1.50 under Section 80C of Income Tax. Apart from this, you can also avail tax exemption on interest paid on home loan under Section 24(b) of Income Tax. In such a situation, if you repay the loan, you will not get any tax benefit.
Home loan is a loan on which the interest rate is very low. In such a situation, you can invest the extra funds in such a place. Where you get more interest. At the same time, if you repay the loan with additional funds, this opportunity will be lost from your hands.
emergency fund shortage
If you repay home loan with additional funds. This affects your emergency fund. In such a situation, if you want to use emergency fund to repay home loan, then you should avoid it. Otherwise, you may have to resort to personal loan or some other loan in times of need.
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