I have the money to buy a house; does it still make sense to take a home loan?
A R Kannan, Coimbatore
You are lucky to have the money to make an outright purchase of a house in these days. The answer to your question rests on how you see the opportunity in borrowing money to buy the house and use the money that you have in any other way to profit. Ask yourself, what you would do with the money that you have, if you borrow to buy the house? Will it be invested? If so, will it earn a higher rate of return than what you would pay as interest cost on the loan? If the answer is yes, then you are better off taking a loan, because you can invest your money better. Do factor in the tax benefits on borrowing as well when you weigh the returns on investments over the borrowing rate. If the answer is no, then you are better off using your own money. Take your call.
