Has anyone looked into the cost-benefit of the tax-benefits of home-loan (s.a. for home extension – adding 1-2 floors to existing house) at current prevailing (and expected mid-term) interest rates, versus not taking a loan and instead dip into savings for same.
Dipping into savings here I mean needing to cash-out on some existing investment (like FD or MFs). Cashing out of MFs right now might not be bad as NAVs of many funds are doing great, but cashing out of FDs would mean some loss of interest/early-encashment penalties.
Home loan with variable rate of interest (currently fairly high), at the outset seems counter-intuitive (excluding the tax benefit) as the interest outgo is likely to be much higher than returns from my other investments. However, after baking in tax benefit, does the situation reverse ? Assuming taxation at highest slab ?
If anyone is aware of some online or Excel sheet calculator for such computations, would appreciate a pointer.