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Once the house is completed, you can claim the regular annual interest on home loan (subject to limits):
| Aspect | Buy in Cash | Take a Home Loan |
|---|---|---|
| Pros | – No EMI burden – Peace of mind – No interest cost – Immediate ownership – No rate hike risk – Strong negotiating power | – Liquidity safety – Tax benefits (₹2L interest u/s 24 + ₹1.5L principal u/s 80C) – Inflation advantage – Potential higher returns |
| Cons | – Savings locked in one asset – Missed investment returns – Limited emergency liquidity | – EMI stress (~₹86k/month) – Interest outgo ~₹1.07 crore – Risk if investments underperform – Income dependency |
| EMI | Nil | ~₹86,000/month |
| Total Outgo | ₹1 crore (house value) | ~₹2.07 crore (principal + interest) |
| Tax Impact | No tax benefits | Deduction up to ₹3.5 lakh/year |
Buy in Cash If:
Take a Home Loan
If person are young (<40) with stable income & person can invest remaining savings smartly (e.g., equity, mutual funds, business)
You get tax benefit on interest only after possession, not during construction. No deduction allowed during construction. After completion:
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