What you can afford should be determined by your ability to service the re-payments of the liability you undertake with a home loan. This would be governed by the loan amount and the interest rate applicable on your home loan. Taking a loan with a view of selling the house a few years down the line at a higher price to help you settle your liability may not always work, especially if the property prices start moving downwards or even if they remain static – as we have seen over the last couple of years the world over.
Given the long term nature of the liability, it also makes sense to protect yourself and your family from any unforeseen circumstances. A life insurance plan that covers the re-payment of loan in the event of an unfortunate death of the borrower can at least help the family retain their home
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