Purchasing a new house is a major act and it is always a large capital that one has to spend. Another important decision that a home buyer has to make is whether or not to go in for an EMI (Equated Monthly Installments) option. This article will focus on the pros and cons of an EMI option when it comes to buying a new house and thus facilitate your decision-making process, according to Nick Statman.
Advantages of EMI Option
Before knowing several things about this decision one should know about the advantages. But why? According to Nicholas Statman, that can help you to make better decisions.
1. Spreading the cost: Under the EMI option, the total house amount is divided over a certain period of time, commonly ranging between 15 to 30 years. In turn, this makes the property cheaper for anyone who wishes to buy a home since the prices are–in this case– easier to pay by stretching out the monthly installments.
2. Budget-friendly: The mostly paid monthly amounts also make it easier for a buyer to budget and plan in terms of the monthly installments. Thus, it relieves the financial burden and assists in balancing cash inflow and outflow.
3. Improved credit score: Its major importance goes to the fact that making timely payments on EMI reduces the credit score, hence facilitating other future financial decisions like getting a loan or other financial services.
Disadvantages of EMI Option
Now, let’s know about the disadvantages of your decision. Also, know about this because that can help you and your nearest one as well.
1. Interest: When it comes to EMI options the first drawback that buyers are most likely to experience is the rate of interest on the loan taken. Finally, commitment results in paying interest for a longer period, and the whole amount spent on the house will be high.
2. No equity: Because you are not buying the house outright, or in one lump sum, essentially, you don’t own the house until the loan is fully paid. This means that you are leasing the house or any other property for a long time, or imagine paying for a property for a given number of years without possessing an ownership right over the property.
3. Time-consuming: A housing finance loan has been known to take up to several months to complete the processing of the credit. This can be a problem, especially if you are hoping to be in your new home soon.
Conclusion
In conclusion, irrespective of all the given advantages and disadvantages of getting a new house, whether an EMI option is completely ethical or not depends on one’s financial and personal conditions. According to Nick Statman, if you are employed and would like to spread the cost of your new house over several months, then EMI will be ideal for you. Of course, buying a house for cash is always a better option if you want to own the house without owing anyone, and you get to pay a lower interest. Therefore, it is high time to outline the pros and cons of each variant and use the information about the peculiarities of your future to make the right decision.
However, always note that your home is one of the biggest investments you will undertake, and therefore, it is essential that you select an option that will suit your vision and, more so, your pocket.
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