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Ideal Age To Buy A Home- Should You Start Young?

By Lodha 20 March 2020

Owning a home continues to be a priority for most Indians. However, this is step is generally taken, when people reach their 30s or when they plan to get married or start a family. People seldom realise that there are numerous benefits to owning your own home at a young age. With a little planning, one can even invest in a property at the start of one’s career. Moreover, one can always sell the property at a later stage, to upgrade to a bigger house. Here’s a look at the benefits of purchasing a property at a young age and the factors that one needs to consider, before taking this step.

Benefits of owning a home in your 20s

   1. A home is a financial investment

When you are purchasing a home, you are also securing your financial future. This is because real estate prices only increase over time, and in a few years, you will be able to sell your property at a much higher price than what you bought it at. A study based on new asset prices has suggested that real estate fares better in long-term investments when compared to equities. (Source)

   2. You will get to build your credit

Purchasing a home at a young age can help you build your credit. If you procure a home loan with a lender or a bank in your 20s, it'll only make your credit history look good. Also, if you can pay your home loan back in time, it will improve your credit score, even more, allowing you to get much higher loans, and consequently providing you with the opportunity to buy a better home for yourself in the future.

   3. You will develop healthy spending habits

Buying a home at a young age is a significant financial commitment, one that can shape your spending habits of the future. Not only will you be paying off the home loan, but you will also have to purchase amenities to maintain your home.

   4. Banks are keener to offer loans to young people

Banks are more eager to loan out money to young people, simply because they are assured that youngsters will be able to pay off their debt on time. Young people have a longer employment term, and their income will rise with age as well, so getting a loan will be easy when you start early.

   5. The house can be a source of income

You don’t necessarily have to live in the home you buy. Instead, you can rent it out and use that income to pay your EMIs. This way, the EMI payments will not affect your daily expenses.

Renting Vs. buying - the better option?

It is true that renting a property, especially a home, has short term benefits. Many young individuals prefer to rent than buy because they are unsure of where they want to settle down eventually, and don’t want the commitment of a home.

However, there are some areas where homeownership beats property renting.

Why homeownership is suitable for the long run

   1. You develop a sense of security and freedom

The first and foremost benefit of homeownership over renting is the security it provides. When you are living in someone else's property, you are essentially living on their terms. Your personal freedom may or may not be curbed by your landowner. But in your own home, you can enjoy uninterrupted freedom and security.

   2. Rent keeps on increasing each year

Picture this, you find an excellent property and decide to pay a fairly high amount of rent for it. In six months, your landowner decides to hike your rent even further. This, coupled with your other expenses, can create an exorbitant bill for your lifestyle. Homeownership saves you from this hassle.

Once the loan is secured, you will only have to pay off a small amount at regular intervals. You will be aware of the amount of EMI you have to pay and can plan your lifestyle accordingly – no sudden increases in expenditure, as far as your home property is concerned.

Factors you need to consider before getting a home loan at a young age

Taking out a home loan at a young age is not uncommon, but there are a few factors that you need to keep in mind:

• You will need to plan your finances effectively, while taking into account your daily expenses and maintenance costs.

• If you want to buy a house as an investment in real estate, then pay attention to the area in which it is located. Houses in upcoming areas are less expensive and provide a better return on investment.

• Look for a house that is ready to move in. That way, you will acquire it faster and give it out on rent to help your EMI payments.

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