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Why Should You Buy a Home at a Young Age?

Buying your own home is a big decision that involves a huge investment. It also has major implications for you and your family. You may be unsure whether now is the right time for you to buy a home or not. Conventional wisdom suggests that the best time to buy a house is when you are young and you have lesser financial responsibilities. Here is why this is true.

  • You Get More Time to Repay the Home Loan

Paying the equated monthly instalments (EMIs) on your house loan is the most difficult part.Taking a Home Loan at a young age turns out as an advantage as you will get more time to repay it. You can spread the repayment over more years and reduce your monthly EMI.

For that, you can utilize the Home Loan EMI calculator to see how your EMI reduces as your loan term increases. When selecting the best loan option, think about a tenor that works for you. Also, make sure to consider your monthly payment capacity. There are other things you should factor in as well.

For example, a first-time home buyer with an annual income of less than Rs.15 lakh gets a concession. This is available under the Pradhan Mantri Awas Yojana (PMAY). It can reduce your EMI considerably. Some lenders also have special Home Loan products for young borrowers. Go for one of these to make the EMIs more manageable.

  • You have a Home Before your Responsibilities Increase

In the early years of your career, you have limited financial responsibilities and very few people depend on you. So, you may find it easier to pay your loan instalments early on rather than when you get older. Once you have a family, you will have other financial responsibilities that you can’t avoid. These financial liabilities may make it difficult for you to pay the Home Loan instalments.

As you reach 40, you may also have to start saving for the big expenses of life. This includes your kids’ education, their marriage, your retirement, and old-age medical emergencies. With everything becoming more expensive, it is a good idea to buy a house early. That way you can get a major life expense, out of the way.

  • It puts you on the Right Side of the Market, Very Early

Your home is the place where you and your family live. It is also a huge return-generating asset. Keep in mind that home prices are soaring in most cities. You do not want to remain a home ‘buyer’ for long. The more you defer your buying decision, the more you will lose as home prices increase. It is better to buy a house while it is affordable and become a ‘seller’.

In other words, become the owner of an appreciating asset that you can sell at a profit. This will allow you to be on the ‘right’ side of the market. You will stand to benefit as the prices increase. Also, you give the house more time to appreciate when you buy it early.

  • It helps you Save on Rent

Do you live away from your parents? Then you know what a big chunk rent can take out of your salary.Living on rent may seem appealing at first. You do not have to take a massive loan and worry about repaying it. But renting is never a good option. Your rent does not give you ownership of the property.

If you buy a house on a loan, you can use the same money to pay your EMIs. Once you repay the loan in full, the house is yours for keeps. You can continue living in it without paying anything more. You could even sell it and pocket a neat profit.

  • It brings Tax Benefits

Buying a home is a great way to save tax early in your career. Suppose you take a Home Loan to buy the house. You will be liable for three kinds of expenses: interest, principal repayment, and stamp duty and registration charges. All three categories are tax-exempt under the Income Tax Act. Interest and principal repayment constitute your EMI.

These are tax-exempt up to Rs.2 lakh and Rs.1.5 lakh per annum respectively. However, in case of principal repayment, the exemption holds under one condition: You cannot sell the property within five years of possession.

You can also claim an exemption of up to Rs.1.5 lakh on stamp duty and registration charges. This is possible only in the year in which you pay these expenses.

  • It Acts as a Collateral

Emergencies are a part of life, at any time you might even face a critical situation where you will find yourself in dire need of funds. You may have a regular income, but it may not be enough to meet the need. For example, someone in your family is need of an expensive surgery, then you can use your home as a collateral for a loan. The loan amount can be paid back in easy installments and you will not have any regrets as you will have provided for the right treatment, at the right time. There are several other situations in your life you can use a home as a collateral to gain additional funds. You could apply for a collateral-free loan, but the interest payable on such a loan is higher, and you need a higher credit score to avail the loan.

Conclusion

There are several good reasons to buy a home while you are young. For one, it reduces your expenses by generating rent and tax benefits on Home Loan. You also become the owner of a major asset before your responsibilities increase. By buying the house early, you give it more time to appreciate in value. Later, you can sell it for a big profit. Besides, you can spread your Home Loan over more years and reduce your EMI burden.

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home loan, home loan, home loan emi calculator, home loan emi calculator,

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