You are just a college pass out and grabbed a job with any of the company. Do you agree that you should own your home? Do you think that it will be too early to get into this complicated decision? Do you think that this is not the right time and age to buy a property so early? You all must have heard the saying,’ the sooner, the better’. It is also applicable and true in the case of home loan. If you have just started your career two or three years bank and you have plans in your mind to buy a property, it is a good idea to be implemented. It is good to start as early as possible. Planning at early age will help you to plan your future in a better way as home loan is a huge financial responsibility. It is always good to invest in property whenevery you think that you have enough funds and have a well though back-up plan to support your idea.
For instance, Rajan Khanna, 26, working as engineer, has work experience of 3 years has bought a house with minimal family responsibilities on him. Now, he is about to close his home loan in next two-three years. As he makes partial payments time to time and opted for the highest EMIs with smallest tenure. Therefore, he is able to close the loan on a faster mode.
This is really a good idea to invest in property at an early age as you will be debt free sooner. In the case of Ranjan, he will be able to close the loan at the age of 36 years. This is the ideal scenario keeping the future responsibilities in mind. Here are some important factors, which young buyers should keep in mind.
Choose the right location: This is a very crucial point to choose the right kind of location to invest in property. If you know that you are going to relocated yourself in next 5 years or you have any future plans to shift to a new city and settle there then buy a property in that city only. But if you are going to stay in your present location then look for a property which will be near to your present location, or at a location which your familiar with. You should look for a location which is safe and have all basic facilities.
Adequate space for all: While buying a home always keep this in mind that you are going to stay there with your family and parents too. You kids need separate room and your parents too require a room. You need some extra space for storage. Always keep these things in mind and buy a property accordingly.
You comfort zone: Do you want big windows in your room to enjoy the fresh air? Do you like to sit in your balcony and injoy morning tea with your family? Do you think that your kitchen is too small to accommodate two people at a time? When you are living in a home you know the advantages and disadvantages of your home. You know well about the areas you think require improvement and makes you uncomfortable. So find out those points which makes you uncomfortable and you want them to avoid in your new home.
Good credit history: This is another important factor while buying the home. You need a good credit history to apply for a home loan. As you are young with minimum debt on your side, you can build a good credit history by making timely and prompt payments towards your home loan. It will make you eligible to apply for a higher loan in future if you require it. As you will have lower financial liabilities there are almost nil chances that you will default your payments. It will help you to build a good repayment track record.
Borrow within your limits: This is another important factor while borrowing the home loan. You should first estimate your maximum and minimum budget keeping your future liabilities in mind. You should always calculate that in future you are going to get a standard salary growth of 7% to 10% per annum, but your family responsibilities and inflation will grow with different pace. So keep this thing also in mind that you are going to meet the family financial responsibilities with context to your monthly income. So take a loan of that much amount which you can repay easily and convert into pocket friendly EMIs.
Tax advantages: All home loan comes with tax benefits. If you have invested you money in under-construction property you can claim the tax benefits of upto Rs. 2 lakh on the interest paid. If you have bought a ready-to-move-in property you can take advantages of home loan to the fullest. You can claim tax benefits for both the portions; for interest amount and for principal amount. You can claim the tax benefits till the whole tenure of the property. It will help you to save some money on that part.
Higher appreciation of property: You bought a property within your budget and you are going to sell in after 15 years or 20 years you will get the higher amount on your property if bought with investment purpose only. It can also help you in arranging money for your next big home if you want to buy in future.
But if you have bought a property in some outer area of the city which is still developing there are chances that your property value will increase more as compared to property value in developed areas. So you have better chances of getting the higher appreciated value of your property in future.
Rental income: If you are living with your parents or you already have any paternal property in that situation you can use this new property to gain rental income. It will help you to increase your income and you can even repay the loan amount with the help of rent as well. If your loan EMI and rental income is almost similar than your financial burden will be minimum and you can fastly prepay your loan either by saving the rental income and making huge partial payments every year.