Would it be a good strategy to buy a plot using a personal loan available at 11.5 per cent interest rate? I'm buying this plot to build my dream home.
- Madhu
I don't know the exact context. But I am assuming that this will be for building her home. From that context, I would say that borrowing to build a home is desirable. Nevertheless, there are certain things to be kept in mind for prudence.
You should put a down payment at least to the extent that the EMI of the borrowed money does not exceed one-third of your monthly income. This acts as a basic hygiene check. In this case, in addition to buying the plot, money would also be required for the construction of your home.
So in my opinion, you should try and accumulate your savings to buy the land with your own capital, unless you come across a special deal or you like that particular piece of land so much that you are even ready to pay a slightly higher cost. These two can be the only justification for borrowing money to buy a plot.
This article was originally published on April 10, 2019.
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