Why rent is better deal than mortgage?.

Saturday, May 12, 2012

Recently,read this article on "mortgage loan" and felt worth sharing.

 Though the article had been written with US market in mind, the points mentioned would very well be applicable for Indians as well. On top of this, Indian system is suppose to have additional drawbacks,

 Indian interest rate is almost twice when compared to US, which mean higher out go of cash towards interest component in earlier years. Another point is that, one who invest money in mortgage, would have invested all his earning and he has to keep paying the interest component for the first few years. After few years, if one is able to make saving or his income increases and decides to pay back or part pay the home loan, its going to only reduce the principal amount for which the interest component is already paid during earlier years of loan.

 Hence, the real benefit is for the mortgage company or financier.

Finally, the cost of real estate in India seems to much higher than developed economies. An article related to " India property bubble".

Is worth to think through and decide before investing. 

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