There are several first time home buyer benefits, and this is why investing in real estate properties is every individual’s wish. Furthermore, in recent years, with more incentives from the government to provide affordable housing, investing in real estate is becoming a norm again. Additionally, it is also easy to get loans from banks when you are buying a home for the first time.
In this article, you will learn the benefits that first-time home buyers have in India. Hence, this article discusses seven major advantages an individual can have after buying a home for the first time. Moreover, you will also learn briefly about the government and bank benefits that a first-time home buyer is eligible for. Hence, to learn more, read on through to the end of the article.
Who Is a First-Time Home Buyer?
Before you learn about first time home buyer benefits, it is important to understand who a first-time home buyer is.
A first-time home buyer is someone who has not owned a property to live in for the last three years. Here, the home should be the primary residence of the homebuyer. Although there is no mention of a specific age, first-time home buyers mostly belong to the age group of 20 – 45.
Additionally, for married couples, either of you and your spouse can apply for a single government subsidy. Apart from that, if you are a single parent (or an individual) with a joint mortgage, you are also eligible to become a first-time home buyer.
Basically, there are special benefits for first-time home buyers. These include lesser down payment options, access to certain grants, closing-cost assistance from government agencies, etc. Furthermore, there are many lenders who offer special loans and various incentives to first-time home buyers.
Although it is ideal to own a home in India, it has become quite difficult nowadays due to various turbulences in the world economy. Hence, home prices are increasing constantly. Therefore, if you want to purchase a home for the first time, it is essential to learn about various advantages you can benefit from. Moreover, having a good knowledge of government schemes and bank loans becomes quite helpful in your purchasing process.
What Are the First Time Home Buyer Benefits?
The following are some of the major advantages that a first time home buyer benefits from:
1. Low-Interest Rates and Down Payment Options
If you are a first-time home buyer, you will have access to many programs having a low rate of interest. Also, you can have lower down-payment options too. Hence, you will be able to better afford the ownership of your home.
For example, as per the Pradhan Mantri Awas Yojana (PMAY), there are plenty of first-time home buyer benefits. Here are the key benefits for the first-time home buyer in India as per PMAY:
- You can get subsidies on interest rates if you take a loan as a first-time home buyer. Hence, you can pay back your loans faster. Also, it will be easy to manage your finances and save more.
- Compared to conventional home loans, PMAY offers a lower down payment option and more flexibility in the payment. Hence, you can benefit a lot, especially if you do not have any big savings to fulfill the down payment.
- With PMAY, the GST (Goods and Services Tax) rate is also lower than with other programs. Hence, you can save on your costs.
However, there are certain income limitations to become eligible for PMAY. Here, you have to be a part of the lower-to-middle-income group. Moreover, depending on what scheme you choose, the income-based eligibility and subsidy percentage will vary.
2. Tax Deductions
Although there are tax breaks for first-time buyers in India, they still work a bit differently than what happens elsewhere.
One of the biggest benefits of being a first-time home buyer is that you can claim a tax deduction on the interest on your home loan. As per Section 24 of the Income Tax Act, you can claim a deduction on what you paid as interest on your home loan. However, this works only when you are a first-time buyer. Furthermore, you can claim a tax deduction of up to ₹2 lakhs.
Furthermore, as per Section 80EEA of the Income Tax Act, you can also claim a further deduction. You can claim a deduction on your paid interest of up to ₹1.5 lakhs. However, to qualify for this claim, you need to meet specific conditions. These are:
- The government must sanction the loan within a specific time frame.
- The property’s stamp duty must not be more than ₹45 lakhs.
Additionally, there might be some other deductions, too, based on the state where you buy a home. Hence, you must always consult a legal advisor or tax expert if you want to learn about tax deductions.
3. You Can Build Your Equity
One of the major advantages of owning a home is that you will have many opportunities to build equity. Basically, equity is that percentage of your home that is fully under your control. Hence, as you make more mortgage payments, you increase your stake in the ownership. As a result, you will be able to use this equity for other purposes, like collateral or making home improvements.
The following are the reasons why home equity is significant:
- In India (especially in major cities), real estate prices have shown a constant appreciation. Hence, after you pay your mortgage and your home value increases, your equity increases as a result. Thereby, you can create wealth through your home.
- As compared to other forms of investment, real estate is much more stable. Also, Indians prefer real estate over other investment options. This is because it becomes a tangible asset and creates a sense of security.
- A real estate investment is a long-term investment. In fact, most Indians see their homes as an investment for the future. Hence, real estate appreciation for the long term benefits Indian families a lot.
- Real estate is also a secure investment for the retirement. Once you pay off your mortgage, you will not need to worry about paying rent. Hence, you can save costs from your retirement money.
Hence, you can see that owning a home is one of the most tried-and-tested strategies to build wealth. Therefore, first-time Indian home buyers stick to it despite fluctuations in the market.
4. You Will Have a Better Sense of Stability and Control
Stability and control are the most important needs for Indian homebuyers. Since family plays a big role in individuals’ lives, these two factors improve things.
According to Investopedia, “Real estate investors make money through rental income, any profits generated by property-dependent business activity, and appreciation. Real estate values tend to increase over time, and with a good investment, you can turn a profit when it’s time to sell. Rents also tend to rise over time, which can lead to higher cash flow.”
The following are some of the ways in which real estate offers stability and control to Indian homeowners:
- Since renting rates can be quite volatile in India, there are security concerns. On the other hand, if you own a home through a mortgage, you will pay something that does not fluctuate. As a result, you will have better financial stability.
- Owning a home holds great value in India, as it shows a sense of achievement and progress. Also, by owning a home, you can secure yourself, as well as your future generations.
- If you start living on rent, you will have limited rights to make modifications to the property. On the contrary, once you own a home, you can modify and renovate it as you wish. Hence, you can personalize your home to fit your needs.
- Real estate properties, especially in urban areas, have a tremendous appreciation value. Hence, owning a home is a stable and long-term investment.
As a result, owning a home in India is more than a mere investment or just a place to live. It has strong cultural significance and also gives a sense of stability and security.
5. A Strong Investment Option
Investing in properties has been practiced for a few millennia in India. People from ancient to modern times understand the significance of real estate’s appreciating value. Hence, people consider it to be a long-term investment. Here are the reasons why real estate is a popular investment option in India:
a. High Appreciation
Currently, India is the fastest-growing economy in the world. Hence, urbanization is growing at a faster rate, leading to a higher demand for housing, especially in major cities. As a result, property prices increase as time passes.
On the other hand, the PMAY program’s goal is to increase the availability of houses. Hence, this factor leads to higher appreciation rates in both cities and rural areas.
b. Investment Potential
India constantly experiences periods of simultaneous high and low economic growth. Furthermore, many areas seem to be geographically risky. Hence, it is important to do careful research on the location before buying a home in India.
Moreover, since real estate is a long-term investment, it appreciates in value by a huge margin. All you need to do is hold onto the property for many years, and you will see its value appreciating manifold. However, selling your home can take time, as real estate has less liquidity.
6. You Will Have Access to Government Incentives
The Government of India came up with a variety of schemes to provide support to first-time home buyers. The goal of these schemes is to promote homeownership and make housing more affordable. Basically, these factors help increase real estate investment, and as a result, there is a boost in economic growth.
One of the major programs is the Pradhan Mantri Awas Yojana (PMAY). As per this scheme, the government aims to provide affordable housing to all. Although the plan was to provide housing for all by 2022, it was halted due to the pandemic.
As per this scheme, if you are a first-time home buyer in India, you will get interest rate subsidies on your home loans. However, you will need to be in the lower to middle-income group. Here, the program makes use of the Credit Linked Subsidy Scheme (CLSS) to lower the financial burden of the homeowner.
Furthermore, as a homebuyer, you can also avail of a variety of deductions. Some of them include:
- A deduction of up to ₹1.5 lakhs on repaying the principal (as per Section 80C of the Income Tax Act).
- If you pay interest on the home loan as per PMAY, you will get a tax deduction of up to ₹50,000 (as per Sections 80EE and 80EEA of the Income Tax Act).
- You can get a deduction of ₹2 lakhs on your paid interest rate (as per Section 24 of the Income Tax Act).
7. It Gives You a Sense of Accomplishment
With homeownership, you can get a unique sense of pride and accomplishment. As a first-time home buyer in India, once you repay the loan amount, the joy of experiencing the ownership of the home is priceless. Hence, investing in a home is also an emotional investment. Furthermore, cultural factors help create a sense of community and belonging.
On the other hand, since renting is less stable due to fluctuating prices, owning a home gives a sense of security. Furthermore, as the value of a home appreciates, it becomes a long-term investment.
In India, owning a home helps to raise a person’s social status. Culturally, owning a home is an example of financial achievement and a better life. Also, as the home is a foundation for family life, it is ingrained in tradition.
These factors help to generate a pride of ownership throughout the country.
Wrapping Up
Hope this article was helpful for you in learning first time home buyer benefits. You can see from this article that there are not only financial benefits but cultural benefits as well. Hence, owning a home provides a sense of pride for individuals in India.
Do you have some more insights to add on owning homes in India? Consider sharing your ideas and opinions in the comments section below.
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