How much loan to take to buy property if i can downpay?

Dear Experts,

How much loan to take to buy property if I can pay mostly from my savings? What is a better strategy - keep my savings in tact and take maximum loan, or take keep loan obligations minimum (after having fund for exigencies of course)? 

Among other factors I can think of, I know other borrowers who got loan on same property (from SBI). I do not consider myself a savvy investor to be able to earn higher returns on my savings than what interest I will pay for loans. Also I think tax exemptions on loan interest is adjusted as interest on my savings will be taxed at highest bracket. Considering above, it seems to me best strategy is to keep debt as less as possible. 

But there are other factors I am missing? Thanks in advance for your valuable inputs. 

Regards, 

Das

Replies (3)

You will tax exemption on loan interest only if it is home loan and not if it is mortgage loan on already existing property. From your querry it seems it is mortgage loan. 

Keeping debt low is good, but one must have strong capital base. The value of property will increase over time, may be much more than other form of investment. You may go for a portion of loan and pay rest from your savings. This way you can have some capital for other investment as well as repay emi from regular income. Few years down the line if you have good enough capital and pre close the loan, by that time property value would have increased manifold. 

Hi Ms. Agarwal

Thanks s a lot for the thoughtful reply.

regards,

S Das

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