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How Early Should You Buy A Home?

Adhil Shetty

Buying a home early is good only when you are prepared to take the financial load. Read on to know the appropriate time to buy a house.

Buying your first home is exciting. However, if you don’t have the necessary funds to buy a house, it can become a big financial challenge and you will have to depend on borrowing. The idea of having a roof is although exciting, but should be done at an appropriate time as a wrong decision can hurt buyer’s financial health.

Having your own home is important as it brings instability as you not only save on the rents but also ensure a peace of mind for yourself while focussing on your career better.

So, what is the right time to buy a property? Should a person buy a home early in the career? Or should one wait for stability before buying a home?

This article touches some important aspects of home buying to help you make a more prudent decision.

Should You Buy Home Early in Your Career?

If you are planning to buy a property through a Home Loan, then you should be first prepared with the margin money to pay. Normally banks require around 15% of the total value of the property as margin money. It means if you are planning to buy a property worth Rs 1 cr, then you should be ready with Rs 15 lakh to pay the margin amount. It could be a difficult task for people who have just started their career to arrange such a big amount. So, it is better to invest money to build a corpus to pay for margin money before you decide to buy a home.

Another important aspect that one should check is the repayment capacity. Suppose you buy a home against a loan of Rs 50 lakh for 30 years at 8.5% interest p.a., then you need to pay an EMI of Rs 38.4K and along with it you also need to pay money for other financial objectives. So, before you plan to buy a home, you should be ready to pay for the margin money, repay EMI on time and accomplish your financial objectives on time.

Avoid buying a home early if you lack income stability. If you are not sure about living in the same place for a longer period due to transferrable jo, then it is better to avoid buying a property until your job location is fixed.

Is It A Bad Idea To Delay Home Buying?

Buying a home too late could also prove to be a wrong decision because you get less repayment tenure on the home loan. Banks normally allow tenure up to 30 years depending on your existing age, and maximum tenure is calculated on the basis of years left in your retirement. Suppose, your current age is 40 years, then, in this case, the bank will normally allow loan repayment tenure of 20 years (60 years ‘less’ 40 years). So, the more you delay home buying, lesser would be the repayment tenure and vice-versa. Also, property prices keep fluctuating depending on inflation and increase in demand. You may not get a home at your preferred location if you delay the decision of buying a home. Buying a home early also allows you to get the tax advantage and lower your tax outgo.

What Is The Ideal Time To Buy A Home?

When you plan to buy a house, you should consider crucial aspects like availability of a property at a location of your choice, the price of the property, prevailing interest rate in the market, margin amount and a regular flow of income that can support EMIs in the long term.

It is wise to regularly invest money equivalent to the EMI that you would have to pay while buying a property through a loan. This will help you create a big corpus and will help you in owning a house of your choice with least loan support.

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