Published on :2024-09-25
One of the most common financial goals that most Indians have is buying a house. And it is not difficult to understand why. After all, being a homeowner is considered a major achievement in life and reflects your status in society. The bigger the house, the better, and the sooner you buy one, the more successful you are.
However, buying a house requires significant investment. You can fund the purchase of your dream home either by spending all your lifetime savings, or you can be smarter and financially prudent and secure a home loan to cover the cost. Now that you know how to get the desired funds, you must decide when is the right time to buy the house and when to apply for the loan.
Well, most financial experts worldwide suggest that buying a home at a young age, i.e., before you turn 30 is wise. Here are five reasons why –
If you are planning to take out a home loan to purchase your dream home, you must know that it is a big financial commitment that you must honour dutifully. If you want to pay off the loan on time, you can either pay a large EMI (equated monthly installment) every month or extend the repayment duration so that the EMI is lower and more affordable.
Most of the financial organisations in India offer home loans for a maximum period of 30 years. So, when you apply for a loan before you turn 30, you can opt for the longest repayment duration and pay off the loan easily without having to compromise on your other financial goals.
Since the loan tenure is long, the sooner you start repaying them, the earlier you can complete them and become debt-free before or by the time you reach retirement age.
As a youngster, you will have lesser or no financial obligations towards your family. This means you can save and use a large chunk of your income to repay the home loan. Also, you can afford to make a larger down payment than the minimum amount required and borrow less. This way, you can reduce the EMI and manage the repayment better.
But trying to build a corpus for a larger down payment will take time, and this is why you must start early. If you start saving money for your down payment as soon as you get your first pay cheque, you may have enough funds within 7-8 years. And if you get a home loan and pay the down payment before turning 30, you can still take advantage of the longer repayment tenure and pay the EMIs comfortably.
When you apply for a home loan, most lenders assess your eligibility based on your FOIR (Fixed Obligation to Income Ratio) before approving it. The lower the FOIR ratio, the better your chances of getting the loan. More importantly, you may even become eligible for a higher loan amount.
FOIR refers to the monthly income-to-expenses ratio. When your FOIR is low, this means you have a higher disposable income at hand, and your chances of default are less. Typically, the FOIR is lesser when you are young as you may not have any major financial obligations.
This is why lenders are likely to approve your loan if you are below 30 and you can make your dream of being a homeowner come true.
Another significant benefit of buying a home at an early age, i.e., before turning 30, is that you can save valuable tax dollars over time. According to Indian tax laws, the principal and the interest amount you repay are eligible for tax benefits under Section 80C and Section 24 of the Indian Income Tax Act.
Thus, you can reduce your tax liability up to Rs. 3.5 lakh in a financial year. You can enjoy this tax benefit for the entire home loan tenure. So, if your loan duration is 25 years, you can save 3.5 Lakhs every year on taxes, which can contribute to a significant sum.
You may also like to read - 9 Home Loan Tax Benefits to Unlock Savings up to Rs. 2 Lakh per Annum
Real estate is considered to be one of the safest and most profitable investments in the market, thanks to its lower risk exposure. In addition, the value of the property tends to grow over time. There are many reasons for this, such as the development of infrastructure in the property's location, inflation, etc. This means if you purchase a home early, the better the chances of your property’s value appreciation over time, and it will serve as a hedge in the long run.
Typically, most properties grow at an annual rate of about 10-20% if they are situated in a good locality and are equipped with all necessary amenities. So, this is reason enough for you to buy a home before you turn 30.
So, buying a home before you turn 30 has several benefits. However, you cannot overlook the fact that property investment requires a considerable amount of funds. By choosing a trusted lender, you can have a stress-free borrowing experience.
At India Shelter, we understand that getting a home loan before 30 is a big financial commitment. This is why we make it easy for you to manage the loan by offering it at the most affordable home loan interest rate and also giving you flexible repayment options.
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