When does a home loan cost too much

I was having an interesting conversation with a financial advisor. We got aroubd to discussing types of loans and priority of closure of these loans.

My opinion was as below

Credit card loans
Personal loans
Auto loans

He however added on another category into the mix and said that was even more important than investing in mutual funds or in the market... He wanted to add into the list HOME LOANS.

At this point we had clearly divergent views... I mean... The rate of interest of the homeloan defines the prioritization and the outcome from investing in mutual funds at a long term return of 15% overshadows the payment of interest of a home loan.

He however had some valid points which we must always consider.

1. Paying off any loan reduces your liability... Hence with a higher homeloan, the insurance costs also rises

2. The expectations of increase in capital for a twenty year home loan to compensate for the interest rate is 3 times in that period.. I am not sure if those type of returns in capital appreciation should be expected .

(If you do consider a 10% interest rate, basically you are paying twice the amount in every 7.2 years... So 3  times the capital appreciation is required ).

If the home loan rate was in the 5% range ... Then you need only one time the appreciation in twenty years ... So a much better rate of return

So in hindsight that seems to be a valid point to add homeloans into that list of prioritization

Sometimes financial answers are linked to asking the right questions basis the context that you are in... And not on standard rules.

Thoughts are welcome

It's simplefinancialsense.