DEBT IS NOT A FOUR-LETTER WORD

While being debt-free is a tempting goal, it often makes better financial sense to embrace it

- Naveen Kumar

Home loans come with some of the lowest interest rates on offer. They even allow for tax deduction benefits on repayment of the principal amount and interest due. As a result, if you have a home loan at the current interest rate of around 8 per cent and you fall in the higher income tax slab of 30 per cent, your effective interest rate be below 6 per cent. However, most people also seek to be debt-free. So does it make sense to make prepayments and pay off your loan as soon as you can afford it? The answer depends on many factors, such as income stability and growth and the scope of your investment goals.

WHEN TO AVOID