The Buyt Desk
Biggest investment in most Indians’ lives would be buying a house. Some buy it earlier and some later in life. Some buy after retirement from the funds saved for retirement. But it is better if you buy it young and enjoy the property when you are growing as a family. Most do not think about buying a house immediately after starting their career. When you start to plan and take small steps towards buying a house from day one of your career, you can own a property very soon in life. Also it is more than just owning a property. It has many benefits which we will discuss in detail here.
What are the benefits of buying residential property / house early in life?
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Lower EMIs – When you go for home loans at a young age, you will be approved for a longer tenure which can be even beyond 20 years. As you are young and have ample time in hand to repay the loan, financial institutes grant the loan easily and quickly. As you have fewer liabilities, it makes it easy for lenders to approve the loan. When you are single and have no kids, you can use most of your earnings to repay the loan and finish off much before the tenure. So it is best to invest in buying a house when you have less liability.
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Ability to handle more risk – When young and not yet started a family, you are very much independent and lead the life on your own. So this is the time to plan a property investment as you have risk taking capacity. If you do not want to invest this early and think that this is time to enjoy and live life, soon you will grow old and regret this decision. You need to concentrate on savings and building credit so that your loan gets easy approval. Your youth with fewer or no liability will make it easy to cut your costs. This way you can build good funds for down payment in a short duration.
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Tax Benefits – Buying property early in life will also help you save some money as you will get tax exemption on the home loan. In India, under Section 80 C of the Income Tax Act, Home loans can avail tax benefits. The buyer will have multiple tax benefits. When you buy a property that is still under construction you can avail a pre-construction interest rebate along with the deduction you get on the interest paid on the home loan.
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Property price gets higher – As years go by, the property rates go on increasing. It is very rare that the real estate is down and property prices fall. This reason should be enough to start investing early in buying a house. As the property price goes up, you have to pay a higher price. Then you have to opt for bigger loans and end up paying more EMI. Lock the property early at lower rates so that your EMI’s are lesser. Know the property price trend in the locality you want to buy and sit on the fence when you know it is the best time.
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Asset acquisition –Who doesn’t want to own an appreciating and trustworthy property at a young age. When you invest young in property, you will have something to rely on when nothing else works in future. Having a possession of a house at a young age gives you confidence and also it is a good ROI investment. The appreciating value of the house will make it worth 2-3 times the initial investment in the short duration of 10 years.
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Another source of income – When you buy a house young and get possession of the house soon, you can rent it out. As soon as the rent starts generating you will have another major source of income. You can use this money to pay off your EMIs or any other debts. And if you are debt free, you can start investing the money you generate through rent and keep building corpses.
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Rent saving – Many youths are scared of investing in property and end up staying in rented houses for a very long time. By buying a house young in life, you can save on rent rather, redirect your rent amount to home loan EMIs and soon you will be debt free and own that property. Few years down the lane (once you have repaid the loan), you do not have to keep aside any money for your stay. With this you will have more money in hand and you can think of other investments to grow your money.
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Appreciated property value is all yours – When you buy a house at a very young age, you would have bought it at a lower price as compared to buying in your 40s or 50s. The property value would have increased many fold when you are in your late 40s. If you sell the property when it is at its peak, you will get a good chunk of money. Even after enjoying the property for these long years, you will still get very good returns. This is a bonus of investing in property very early in life.
Summing up
House ownership is not an easy task and it has its own responsibilities. But not to forget all the above benefits you will reap. Be sure that you make wise decisions and right choices while investing in your first property. Yes, it is daunting to take a major loan at a very young age but with little discipline it has many upsides to it. Just make sure you look into every aspect before buying.
