30 Oct 2008

Home Loan - Safe Investment?

Many people have Home Loan as a steady investment plan. But at the current prevailing rates (above 24%) does one get really benefited? Home loan has the following advantages..
1) Home as the end product
2) Annual premium can be shown as an investment
3) Keeps the person on toes... make him have a regular saving habit
4) Independent of market fluctuations...you have nothing to loose unless you opt for a floating interest rate
5) Long term investment
6) Ever increasing value of real estate, thereby adding to higher value of asset
7) Investment (price) as well as insurance (value) option with time...
8) Insurance cover

No matter....housing loan is no doubt a good option..if you have a house in mind.In a place like Mumbai. where space is scarce.. the land rates are 4500(min) to 15000 ( max) per square feet, depending on the location. So the basic need of a person in Mumbai is Basically a home of your own.. as compared to the prices of fuel,food, cost of living... land rate is beyond comparison. As the saying goes.." sow sparingly, reap sparingly; sow bountifully, reap bountifully".. except you know where you are investing and make sure you really need it. Theres no point investing if you do are doing it for the sake of investing. A monthly EMI will be enormous for a long period of time for the price of a decent flat in Mumbai.

The negative points for home loans may be ..
1) High land rates
2) High interest rates
3) High EMI
4) Long term commitment
5) Unpredictable outcomes

So think twice before leaping.. !


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