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10 February 2011

Is There a Need for a Home Loan?

Many people follow the standard procedures for purchasing a home and apply for a home loan during the purchase of a home. It is important to understand and critically assess whether we really need this loan? Applying and paying the loan amounts to large interest added to the total property value and in the long run we end up paying much more than the total value of the property purchased.
One must be honest and do critical appraisal of their financial standing. Their monthly salary if one or both spouses must be considered.  If in a good financial post then whether it is possible to save one spouse’s salary or more than that also must be considered after assessing the monthly expenses. Gold, property and other assets the family possess is also important. Some of the people also are in the process of selling their old home to purchase a new one. So here also finances are added though this may take some time. Fixed deposits, bonds, shares and other investments must also be considered to get he right financial standing of the family. Relatives and friends also can pool up some amount without interest added on friendly terms or as gifts. All this will help in collecting money required for the purchase and one can assess how much loan do they require critically. Whether they really need to take a home loan or a small personal loan will do. Also consider whether they can manage without applying for a loan with selling of some assets that are not giving proportionate returns. Always consider that the lender will offer loans on a high interest rate and the borrower though over a long tenure of many years ends up paying a large sum than the total value of the property purchased.

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