Would it be a good strategy to buy a plot with the help of a personal loan of 11.5 per cent? I'm not buying this plot for investment purpose but only to construct my dream home
- Madhu
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I don't know the exact context of this. But I am assuming that this will be for the part contribution for building his home. From that context, I would say that borrowing to build a home is desirable but there are certain things to be kept in mind for prudence.
You should put a down payment atleast to the extent, that the EMI of the borrowed money does not exceed one-third of your monthly income. This acts like a basic hygiene check. In this case, besides buying the plot, money would also be required for construction.
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 the land.