If there was one financial goal to unite most Indians, it would involve buying a house. And why not? Not only do these make profitable investments that have larger ROIs, but they also signify wealth and status in society. Of course, the bigger the house, the better, and the earlier one secures it, the more successful one is.
But here’s the thing. Buying a house (especially your dream one) requires a significant funds. And if you want to buy a home in this day and age- there are two ways you go about it. The quickest way is to use your inheritance to get a house. But the second-best way to do it is to secure a loan to cover the costs. And most opt for the latter.
Now that the finances are sorted, the big question- when should you think of buying a house? Moreover, when should you consider getting a home loan? Well, we are here to tell you should buy a house and get a home loan before 30. Here’s why.
Five reasons to buy a home before turning thirty
1. Longer loan tenure
If you are planning to get a home loan to finance your home, you should know that it is a long-term loan that typically involves a high loan amount. Naturally, if you want to pay off the loan on time, you could do two things.
One, pay a larger EMI every month, or two, extend the tenure to pay an affordable EMI. Most aspiring homeowners choose the latter as it helps them manage their finances better. Besides, this way, they can pre-close their loan later on if they accumulate the funds too.
Given the longer loan tenure, it is clear that the earlier you start your loan repayments, the earlier you complete them. So, why not get a home loan before 30? This helps finish loan repayments before the retirement age of 60, meaning you can comfortably make the loan repayments while you are still working, bringing down your financial stress significantly.
2. Lesser financial burden
It is no secret that younger people have lesser financial obligations. You can cut costs, budget, and live with limited finances. This means you can also set aside the remaining funds for paying off the home loan. Else you could go a step further and create a small corpus and add money to it for home loan down payment. This way, you can reduce the total loan amount payable and reduce the EMI burden.
Of course, building up a corpus for a sizable down payment will take a long time, but this is why you must start early. If you start building a home loan down payment corpus soon after you start earning, you can collect enough funds of 8-10 years. And if you do manage to get a loan and pay the down payment on the home loan before 30, you still get the benefit of a long loan tenure. This means more comfortable loan repayments all around.
3. Higher loan eligibility
Most lenders look at a borrower’s fixed obligation to income ratio (FOIR) before granting a home loan. Usually, the lower the FOIR ratio, the better the chances of securing a loan, thanks to better home loan eligibility.
Why? Because a lower FOIR means a lower proportion of the monthly income gets diverted towards paying off debts and other obligations. This means the borrower has more funds to pay off the home loan EMIs, ergo a lesser chance of defaults.
If you didn’t know already, your FOIR ratio is lesser in the earlier stages of your life. Which is why lenders are more likely to grant you a home loan before 30. What’s more they might even offer a higher loan amount.
4. Investment in under construction properties
Whether you are unmarried, a new professional or a newly married person under thirty, you can wait a few years before moving into a new home. This means you can invest in under construction properties as well. Pro-tip-under construction properties generally cost lesser than ones that are ready-to move in. Besides, if you choose a good locality and a reputed builder, you can get hold of a valuable property with time.
Most lenders provide home loans for under construction properties in trenches or smaller instalments and disburse the funds at different stages of construction. What’s more, some lenders even charge EMIs on the amount disbursed. This can lower the loan EMI burden significantly, making repayments easier.
5. Higher ROI
Real estate is one of the safest investments out there, thanks to its lower risk exposure. To add to it, property values tend to grow with time. The reason for this? Well, property value increases due to a number of factors including geographical location of the property, inflation, market supply and demand, etc. To that, property prices rise during inflation, meaning if you invest in them early on, they can serve as a hedge in the long run. Besides, thanks to property you also get returns in more ways than one. Think of value appreciation and rent.
Safe to say, the earlier one buys a house or invests in any form of property, the better the chances of value appreciation with time. In fact, typically, most properties witness an annual appreciation of anywhere between 10-20% if they are situated in a good locality equipped with all the necessary amenities. All the more reason to invest in property early on (before 30)? We sure think so.
Over to you
It’s clear from the above that getting a home before thirty has its fair share of advantages. But one cannot ignore that it requires a considerable amount of funds. Sure, getting a home loan before 30 can help with making loan repayments easier. But getting a loan with a trusted lender can make loan repayments truly stress-free.
At Tata Capital, we understand that getting a home loan before 30 is a huge financial responsibility. This is why we make managing it easier for you with our best-in-market home loan interest rates and flexible repayment schemes. Connect today!
31 May 2022
6 mins read
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