1. % of EMI to your "take home" salary:
Should not be more than 25-30% e.g. Your gross salary is Rs. 60k/month and take home (after PF and tax) is 50k/month, EMI shouldn't be more than appx. 12.5 to 13k/month.
Reason: You have/will have other liabilities like other premiums like insurance, investments, retirement planning, children's education, medical emergency, job loss (recession), etc.
2. Tenure:
Don't go for too long tenure such as 25 years. Especially if you are in the 40's. Plus, in low tenure loans, you will end up paying more EMI but less interest. However, balance this with point (1). above
3. Penalty for not paying EMI for some duration:
Check the interest rate type - floating/fixed. Check the grace period. If EMI is insured, still it normally is for around 2-3 months. So, ultimately you will have to make arrangements for paying subsequent EMI.
4. Does it build your assets or is just for luxury?
It is not a good idea to take loan for improving your lifestyle. However, either if it builds your property/assets (e.g: home) or it is a requirement (e.g. bike) then you can definitely consider it.
5. Do you have any mortgage if you are not able to pay the loan?
If no, then lender has the authority to seize your property for which loan was taken (of course as per the loan agreement). Plus, it hurts your reputation.
6. Is the asset value going to appreciate or depreciate?
It is observed that value of home always appreciates over a period of time. However, value of car/bike depreciates. So, you should consider this.
Should not be more than 25-30% e.g. Your gross salary is Rs. 60k/month and take home (after PF and tax) is 50k/month, EMI shouldn't be more than appx. 12.5 to 13k/month.
Reason: You have/will have other liabilities like other premiums like insurance, investments, retirement planning, children's education, medical emergency, job loss (recession), etc.
2. Tenure:
Don't go for too long tenure such as 25 years. Especially if you are in the 40's. Plus, in low tenure loans, you will end up paying more EMI but less interest. However, balance this with point (1). above
3. Penalty for not paying EMI for some duration:
Check the interest rate type - floating/fixed. Check the grace period. If EMI is insured, still it normally is for around 2-3 months. So, ultimately you will have to make arrangements for paying subsequent EMI.
4. Does it build your assets or is just for luxury?
It is not a good idea to take loan for improving your lifestyle. However, either if it builds your property/assets (e.g: home) or it is a requirement (e.g. bike) then you can definitely consider it.
5. Do you have any mortgage if you are not able to pay the loan?
If no, then lender has the authority to seize your property for which loan was taken (of course as per the loan agreement). Plus, it hurts your reputation.
6. Is the asset value going to appreciate or depreciate?
It is observed that value of home always appreciates over a period of time. However, value of car/bike depreciates. So, you should consider this.
No comments:
Post a Comment