What Are The Advantages of Buying a Home When You Are Young?

Investing in a Home - Better early Than late

There are various advantages to purchasing a house early in your career, but it is only achievable if you plan your purchase well.

Set The Foundation Right

One may establish and then strive towards goals such as purchasing a home or a vehicle or taking an annual overseas vacation. Checking off a box early in life is not just a personal accomplishment, but it also begins you on the road to financial discipline, which may assist you in achieving all of your other objectives as well.

Most individuals do not acquire a house until they are in their late 30s or early 40s. And it makes perfect sense; one has sufficient money, assets, and capital to finance a magnificent property. But, there are a few advantages to purchasing a house early. These are a few examples.

Early Start - Better Planning

Since you are young and have more time on your hands, you may get a house loan with a longer term, hence minimising your EMI obligation.

Prepaying your mortgage throughout the early stages of the term can save you a large amount of interest.

Hence, if you pay only one more EMI each year, you would save roughly INR 15 Lakhs in interest. If you increase your EMI by 10% annually, you would save around INR 35 Lakhs in interest.

Revenue-Generating Asset

Although the majority of young Indians live with their parents until marriage or relocation for employment or school, investing in a second property might help you produce a second source of income.Planned properly, a second house may result in beneficial results such as wealth building, a passive income stream in the form of rent, and prompt retirement.

If you purchase a home early, you will likely keep it for at least two decades, if not longer. Thus, the price gain might be large if you want to sell it in the future. To make the most of the price appreciation, you must do your due diligence and invest in an emerging location with the potential to become popular or a popular area that will remain so for a long time.

Credit Rating and Tax Savings

Whether applying for a loan or simply a credit card, the credit score is a vital consideration. Financing for homeownership will introduce you to credit ratings early on. The prompt repayment of your loan will assist you in establishing a solid credit history. This can help you establish an excellent financial profile for any future borrowings.

A house loan may also simplify tax planning and provide access to a variety of benefits. It will account for the tax savings claimed on the principle and interest repayment of your loan (in the old regime).

But, bear in mind that because you will be making a large financial commitment early in life, this will impact your subsequent financial choices.

Hence, if you choose to buy a house early, you should not plan any large purchases in the near future.

When you decide to purchase a property, you must consider the following factors:

• Do I have at least 20% of the total amount available as a down payment?
• This 20% down payment will reduce my overall portfolio by less than 50%, correct?
• Do I have sufficient funds saved to cover EMIs for at least one year?
• Does the EMI consume less than fifty percent of my monthly income after taxes?

If you responded yes to the questions above, you are in a position to purchase your first house. Albeit before taking the last leap, contact a financial professional or your investment adviser as a precautionary measure.