Negative Side of Taking a Home Loan
Post by : favouritehomes
People are increasingly buying homes at a younger age. Where most people managed to save enough funds for buying a home by their mid-forties in the earlier days, couples are now buying homes much early on. This is not because the younger generation is saving so much money, but because they are relying on home loans from banks to pay for a major portion of the cost of their home.
It seems very exciting to become free of the hassles of living as a renter much earlier in life and gain the freedom and pride that goes with being a homeowner. What’s more, these home loans also come at attractive interest rates in single digits as compared to other personal loans. All this and more lures people into opting for hefty home loans which may be up to 80% of the total cost of their home. And as with all good things in life, there is a negative side to taking home loans too. Here’s a look at some of these factors:
Do The Maths
By the time you finish paying off the principal loan amount and the interest charged on it, you will find you have paid so much more than the actual cost of the home. In other words, there isn’t much margin left for profit if you had to re-sell the home.
The monthly EMI deductions can, unfortunately, impinge on your lifestyle too. While your mates in the same age group are going for expensive vacations or splurging on luxurious items, you will have to sit back and save for the next EMI repayment. Since a majority of home loans are for 10-20 years tenure, the homeowner is going to be bogged down by this burden on personal finances.
Since there are fluctuations in real estate, the property purchased might not always give you the expected appreciation values. This would mean that your investment isn’t profitable and can set you back financially.
Death or Divorce
In cases where the spouse is a co-applicant or co-owner of the property, a split in the marriage can jeopardize EMI repayments. A spouse may refuse to contribute towards the EMI, hence creating a huge financial burden on the other spouse. Similarly, in the event of the death of a spouse, the surviving spouse will have to bear the burden of repayment.
Take heart however as there are many positives to taking a home loan too! And if you are interested in buying a home, then check out the numerous unmatched apartment and villa projects by Favorite Homes in Trivandrum.