Should you buy property with own funds or loan ?

The decision of whether to buy a property with own funds or a loan depends on several factors, including financial stability, long-term financial goals, and personal preferences. Here are some pros and cons to consider:

Buying with own funds:

Pros:

1. No debt: Buying a property with own funds eliminates the need for debt, which can be beneficial for individuals who do not want to take on a loan or have a limited credit score.

2. Savings on interest: When buying with own funds, there is no interest payment, which can save significant costs over the long term.

3. No risk of foreclosure: Buying with own funds eliminates the risk of foreclosure in the event of a default on the loan.

Cons:

1. Limited cash reserves: Buying with own funds might exhaust a significant portion of cash reserves, leaving little room for emergencies and other investments.

2. Opportunity cost: Investing a large sum of money in a property might mean missing out on other investment opportunities that can provide higher returns.

3. Limited tax benefits: Buying with own funds might limit the tax benefits associated with a home loan, such as tax deductions on interest payments.

Buying with a loan:

Pros:

1. Financial flexibility: Buying with a loan provides financial flexibility, allowing individuals to spread the cost over a more extended period and maintain cash reserves for emergencies and other investments.

2. Tax benefits: Home loans come with tax benefits, including deductions on interest payments, which can help reduce the tax liability.

3. Leverage: Buying with a loan allows individuals to leverage their investment, increasing their potential returns over time.

Cons:

1. Debt: Buying with a loan means taking on debt, which can be stressful and limit financial flexibility in the short term.

2. Interest payment: Loans come with interest payments, which can add significant costs over the long term.

3. Risk of foreclosure: Taking a loan means the risk of foreclosure in the event of a default on payments.

In conclusion, the decision to buy a property with own funds or a loan depends on personal circumstances and financial goals. It's always advisable to consult with a financial advisor to assess the individual situation and make an informed decision.