Publication details: Money Manager – CNBC Bajar – 14-07-2015
Responses, opinion and view from Kartik Jhaveri.
Question sent by Malvika Dave and Jay Kothadiya:-
Please provide us some information about home loans with regards to the following:
- When should it be taken?
- What is the interest rate?
- Does a home loan go on for entire life?
- Should we opt for a home loan or not?
Advice given:
- A reality check is required before taking a home loan. Home loan EMI should not be more than 30% of your net household income.
- Interest is linked to the banking system and moves up and down over time.
- If home loan rates goes up, your EMI will not rise, but the lender will extend the tenure. This is the situation where you end up with paying EMI for a very long time with high interest cost. If your financial condition allows, then opt for paying higher EMI rather than extend the tenure if interest rates goes up.
- Also remember that you are not obliged to stay with one loan from one company – you can have your loan refinanced i.e. you can move from one institution to another as you get a better proposal and in other words if you are getting a cheaper rate of loan from another institution.
- Home loan is a very good loan as the value of your property is also rising with time. So if you do not have the money such home loan is a necessity. If you have the funds you may consider taking such leverage (provided you can afford the cashflow) so that you may gain tax advantages too.