Apartment - Short Term Investment

[ByJupiter]

I have been looking to buy a plot actually for a while but either they are not in budget or not liking what I'm getting. So instead of waiting endlessly, I'm thinking of going for an apartment for the time being as I need to focus on work. This will be for my own residential purpose.

Considering that I'm going to take a 50% housing loan for the apartment and the interest amount is more during the initial years of the loan, would it make financially a sound decision to buy one only for a period of around 5 years? After that I plan to sell it off and purchase site+construct my own house.

[zodiac]

Is the bank OK with a 5 year home loan ? If so you have these options
i. Go for a 10 or 15 yr loan but pre-close it in 5 yrs. RBI has instructed banks to not charge pre-closure charges. So you should not be losing anything due to pre-closure.
ii. Go for a 5 yr loan and let it to complete its tenure. But it is likely the last year's interest component might be too less and wont be anywhere near 1.5 lakhs.

In either ways it is good to close the home loan within 5 to 8 years. Because the IT rebate is not beneficial beyond a point when the interest component is less than 1.5 lakhs. So look at options where the interest component is more or around 1.5 lakhs for atleast 5 yrs.

I dont have the bank figures for EMI and the interest component spread across for option i and ii. It will be a good study.

[ByJupiter]

I didnt actually ask the bank for a 5-year loan. All this while, I had only enquired for loan for site+construction so no idea about that. But even if the tenure is long, I can always sell the apartment and the buyer can take over the loan or preclose it, or however that whole arrangement is done you know.