November 4th, 2016
One spends a lot of money when living in rental accommodation for years. The rising real estate prices in the country might make the home loan purchase difficult if one defers the plan of purchasing. Hence, it is better to avail a home loan and buy a house when one is quite young. There are plenty of reasons that differentiate a home loan offer for an early buyer vis-à-vis a late buyer.
- Lenders offer a higher tenure which results in a lower EMI. The home loan tenure is counted backwards from the applicant’s retirement age. Thus, a 40-year-old applicant will get a maximum tenure of 20 years since retirement age is counted as 60 years. Few lenders extend home loan offers even up to 70 years. But it is always better to avail a home loan when one is in their early 30s or later 20s so as to get an option to choose a larger spread in terms of tenure. A higher tenure also means a corresponding lower EMI which cushions the monthly cash outflow as well.
- Finance institutions perceive young applicants as ‘low risk’. Home loan applicants in their 20s and early 30s, with relatively good health, a stable income and a long working life ahead, are perceived as low risk applicants. So it is better to apply for a home loan during early stages of professional life.
- Younger persons can afford to invest in under-construction properties. Those who are single, have recently married or who are early entrants in the professional arena can afford to wait a few years till the project is completed. In the time during which the project is underway, they can periodically pay towards the property and have smaller installment burden as each successive slab is laid.
- Younger age groups are less burdened with financial obligations. Rising familial obligations and high living expenses as one goes from one life stage to another can make one circumspect about owning a house. One should invest in a house of their own in the early years or as they start to earn. This means lesser liability ahead as further important stages of life are met. This also enables loan closure at a relatively earlier stage.