I have enough savings to do an outright purchase of a newly completed house in India whereas the other option is to take loans for that amount for 10 years. What should I do ? If I am a conservative investor which option would you advise. Should I go for a loan or should I do an outright purchase ?
2007-02-07 18:08:46 · 6 answers · asked by msrv2005 1 in Business & Finance ➔ Renting & Real Estate
It depends on if you need cash for other things. If you have no need for your money, then purchase it without a loan. Otherwise, consider the loan and whether there are any tax benefits.
2007-02-07 18:12:01 · answer #1 · answered by the Boss 7 · 0⤊ 0⤋
The answer to this question, quite simply, is another question. What is the interest rate offered on the loan on the property and what interest rate are you confident you can achieve by investing that money you would have otherwise spent on the home? If you can invest the money elsewhere and make a greater percentage return, then you are better off taking the loan. I'm not sure of the tax situation in India, but in the US there are tax benefits to paying mortgage interest as well. Also keep in mind that the house itself could be viewed as an investment, if home values are appreciating in that area. Talking to a reputable financial adviser to compare these different scenarios is probably your best bet. Good luck!
2007-02-08 02:32:38 · answer #2 · answered by Fungus Amungus 1 · 0⤊ 0⤋
If you're worried about spending all that money in one split second, maybe you could put down a large chunk (say half of the purchase price) of money on the house and then get a loan for the remaining half. That way you'll still have a nice sum of money to invest or have in savings and a much smaller loan to pay off. But if there's interest on the loan, it wouldn't be wise to let the money sit in savings if it isn't earning more interest than you're paying on the house loan. That just ends up costing money.
2007-02-08 02:14:49 · answer #3 · answered by Keruma 2 · 0⤊ 0⤋
Purchase is always better than loan. A conservative investor would not gamble with a sure thing. If you take a loan, and the economy changes, you could lose your investment and your house. Never gamble with your house. It will also earn you more respect in terms of being able to take care of a family.
2007-02-08 02:15:39 · answer #4 · answered by sandcatsle 5 · 0⤊ 0⤋
I would do the outright purchase so you don't have to pay an interest rate.
2007-02-08 02:11:34 · answer #5 · answered by Peanut Butter 5 · 0⤊ 0⤋
buy it outright.if you take a loan you will invariably end up paying more for the house in interest fees etc.
2007-02-08 02:17:12 · answer #6 · answered by beanyboy79 1 · 0⤊ 0⤋