Hello,
I have just blocked an apartment. The total cost is around 70L (excl regn). I would like to know if it is better to take a home loan or give complete cash payment. For the second option I’ll have to sell a property 🙂
I know that home loan provides tax benefit, but is it worth considering that we repay almost double the loan amount over a period of 15 yrs. Tax saving will be around 7L for 15 yrs loan of 30L (1.5L interest + part of 1L principal; entire principal amount of 1L cannot be claimed due to epf and epf will keep increasing yearly, so I have taken approx amount for principal. I think if I go for joint loan with spouse we can get benefit on 1.5L interest plus 1L principal each?)
Loan = 30L; repayment = 60L; tax saving = approx. 7L
1. No loan (cash 45L + sell property to raise 25L)
2. 40L cash + 30L loan (SBI)
3. 40L cash + 30L loan + sell site and put 25L in MaxGain (SBI)
One advatnage of option 1 is that – there’s no EMI burden for 15 yrs…however I also think that instead of giving down payment, if I stay invested, the value of investment may be much higher than the loan interest we pay over a period of 15 yrs. Please suggest what is the best option.