Is it wise to repay the full Home Loan ?

POSTED BY sribhai ON January 30, 2014 9:23 am COMMENTS (11)

Hi All,

I took a home loan of 14L(emi 14792 for 17Y) in 2011 and still the outstanding balance is 13L 30K. I now have the needed money to repay the complete loan amount. is it wise to repay the loan or should i be investing the saved money in another property(30L worth property with again 16L loan).

i earn 13L PA( 85 K net). after all my expenses my current savings are 50K.

11 replies on this article “Is it wise to repay the full Home Loan ?”

  1. ashalanshu says:

    Dear Sribhai, if the idea is to go ahead either now or later on for 2nd house, please do not preclose the 1st home loan. Please read my above reply again. Keeping home loan for rented house is beneficial to bring down the tax outgo on rental income as well as salary income.

    Thanks

    Ashal

  2. sribhai says:

    Thanks Ashal. I can manage 1st home emi( 14792) and 2nd loan emi assuming 18L loan , emi of 20K. if i finilize a property in a month or 2.. il go for the 2nd home else il repay 1st home loan and will plan accordingly.

  3. ashalanshu says:

    Dear Sribhai, if you opt to purchase one more house on loan as of now before closing the 1st home loan, the total loan burden on you ‘ll be huge. Check can you bear it for long? If the answer is yes, opt for 2nd home loan right now.

    Interestingly, if you put 1st home on rent with running home loan and opt for 2nd home for self consumption, you can claim tax benefit on both loans.

    Thanks

    Ashal

  4. sribhai says:

    Much thanks Credexpert.

  5. Credexpert says:

    Dear Sribhai,

    Are you generating any rental income from this home? In case you choose to close this loan you could lose on the tax benefits you are entitled to.

    Regarding the second home loan, since you have the surplus cash flows it would be a good option to invest. Ensure that you evaluate other options of investment as well.

    Regards,
    Credexpert
    http://www.credexpert.in

  6. sribhai says:

    Hi Ashal,

    Ive seen ur ealier posts on diffrent queries and they all make sense to me. it would be great if you could clear air on my confusion.

    Thanks in advance

  7. luckyr18 says:

    Well Sir, I m not expert, what i have learned is all from Jaagoinvestor,

    I m so sorry.

  8. sribhai says:

    I donot have the said accnt.all im intrested to know is the approach which way do you think il be on profitable note.buying a new property with additional loan (and vl stay der)and then rent out my 1st property. or repay my loan on 1st property make savings and then take a loan and buy the property.

    Im looking for experts to throw some light on the timing on repaying the loan

    thanks in advance

  9. luckyr18 says:

    IF u have SBI Max Gain account, repay the loan and then search for property,.. if u find something handsome, then took out the money from max gain.

    Remember : repaying doesnt mean closing of MAx Gain Account

  10. sribhai says:

    Hi Ashal,

    I can. but im intrested in buying a property which is much bigger than what i own now and then rent out my 1st property.but my doubt still stays in 1st part of my query is it good to go ahead with my approach or is better to clear loan and then think of buying a new property.

    Regards,
    Sri

  11. ashalanshu says:

    Dear Sribhai, can you not think of any other investment beyond real estate?

    Thanks

    Ashal

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