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POSTED BY ON May 27, 2014 9:34 pm COMMENTS (6)
Hi
I have like around 5 lakhs of debt on me which are mostly personal loan and other EMI’s which i am paying regularly without fail. now i am planing to go for buying a house. can u suggest me reg this plan, is it good time to buy. it will take around 2 years to close all the emis at present rate.
the personal loan i have taken for 4 lakhs , out which i gave 2 lakhs for my friend , which now seems not recoverable, so i have to bear with it.
my take home is around 60k per month and ctc is around 10lakhs per year along with the bonuses.
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Personal loans is always on higher interest rates than that of other loans. So you are going to pay more interest in next 2 years if you don’t close it now. Now that you already have this loan going one + other consumer loans, better to close the loans first and then look at availing a home loan, else you may not get enough loan sanctioned.
I would suggest if there is no pre-payment penalty on your personal loan, please use your parents money to close the loan immediately. Else continue paying your personal loan and invest your parents money in FD / Debt funds. Once your personal loan is closed, use parents money (plus your savings) to make down payment of your home and avail a home loan.
Totally Agree !!
kasinadha
your open personal loan will have a impact on your home loan amount if you take the loan before closing it out.
Let us assume you go for a loan for home and take 20L loan how are you planning to pay the EMI for this loan?
as of now out of take home 60K-(13.5+10)K =36.5K is what is left
If you take 20L loan without paying off other emi you have to pay 20K in EMI which will make you left over to 16K will that be sufficient for home expenses. Even if it is do you have enough emergency fund for unforseen thing that can happen in life? and a life insurance to cover in case of your death during this period?
Even if you say YES to all questions above i would still advise you to close all the EMI you have before going for home
Home is big investment and you can never clearly estimate the requirment in the initial phase
So pay off everything create a emergency fund ,start term insurance and then go for the home loan
hi Sharath thanks for ur input,
i am paying an emi of 13.5K pm for my personal loan which still has 2 years period to complete. others emis amount to 10K are like small amounts for some comsumer items, which i am planing to close with in 3 months from now. regarding the downpayment, my family is ready to support me on this, but i cant effort to spend that money on closing my personal loan since it is the only surplus amount our family is having. the point is while going for a home loan, will there be any option so that i can close my personal loan and the rest amount i can use it for house ? since if i continue with my personal loan the home loan which i will be gettin will be minimal.
so please educate me on how i can get get a good deal in my situation
Hi Kasinadha,
You didn’t mention how much you are paying as EMI out of your 60k and what are your expenses and investable surplus.
Many factors come into picture while buying a house. Property rates, appreciation chances, purpose of buying (investment/ for self stay), loan eligibility, steady income to pay off loan, % of EMI in your salary.
You can consider taking loan but what about the down payment ? you need at least 20% of the property value as down payment. If you have that 20% amount handy, I would suggest you to pay off those personal loans first, as they are expensive loans. After that you can think of additional house loan and buying a property.
Meanwhile, I recommend this article to you:
http://jagoinvestor.dev.diginnovators.site/2014/05/one-should-lend-money-to-relatives-and-friends-or-not.html
Dear Kasinanadha,
If you want to purchase a house, please work on the loan amount depending on the cost of the house.Before you could start i would suggest to close all your personal loan, which will help all your cash flow towards your housing loan. Plan your EMI in such a way that it is not more than 40% of your gross salary.