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POSTED BY ON August 26, 2011 12:39 pm COMMENTS (4)
Hi Sir,
I am staying in Bangalore. And I am planning to construct a house at my village in Andhra Pradesh.
I have enough money to construct the house. And the construction cost approximately 20Lac .And my salary is 10Lac per annum.
I am already saving 1.2Lac (20K infra structure bonds) per year for tax benefit.
Is good for me to go for home loan? If it is good how much amount I have to take from home loan?
Please advise me.
Thanks
Ravi
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Dear Ravikumar, even if you opt to take loan, you w’d have to pitch in 5L Rs. from your own pocket. So the question remains for remaining 15L Rs. If you opt to take loan, how much return w’d you be able to earn from these 15L Rs. If you are able to earn more than the tax benefit adjusted interest rate of home loan, you may go for home loan. Else use your own resources to construct the house.
Thanks
Ashal
Dear Ravikumar, as the land is in a village in Andhra Pradesh & you are working in Banglore, not many bank ‘ll come forward to grant you a loan. As it ‘ll be a construction loan, please do check that you have all the necessary papers with you related to your land.
On a 75-25 ratio, you may get around 15L Rs. as loan. Keeping your income in mind, financially there should not be any problem with the bank to grant a loan as you can easily pay your EMIs.
From your query, one important thing is missing – where do you have invested the 20L Rs. meant for house building?
Please answer the same.
Thanks
Ashal
There is no issues with Land documents. And the land is registered in my name only.
What ever the money I am going to investing on construction is proper white money only.
Is it good for me to take home loan?
Why I am thinking is if I am taking home loan.. I am unnecessarily paying interest to bank.
The tax benefit I will get only 1.5L (Interest payed on loan) and
1L from the principle of loan.
In my case I am already saving 1.2L (LIC,PF,Infra Struc Bonds), So the principle 1L waste for me.
So please advise me only
You have to ask for reasons are there for you to take a loan ? If you want to get tax deductions , only then it might make sense .. but a lot of people take loan so that bank will do the background check of titles etc , in your case as the land if your own , you wont have that reason . If your cash flows are strong . You can take some loan .
Manish