Does It Make Sense To Buy A House Early?
Is Now The Right Time?
You may be earning a high salary right now to afford a house - but can you stick with the 10-15 year financial commitment that comes with taking out a home loan?
There are many factors to consider - property rates, your age, whether you have enough funds for a down payment and how you are using the home (to live in/as an investment).
Fluctuating property prices are a big factor in home purchase.
When prices go up, you will end up paying more, and vice versa. Understand price trends and act accordingly.
Strike At The Right Time
Buying property early (when the price suits you) means a lower lock-in rate.
But, if you notice prices moving downward, it may be wise to wait it out.
This is generally measured by property prices vis-a-vis annual income - and it has become favourable in the last decade or so.
The thumb rule to follow is: the EMI amount should not be more than 1/4 of your monthly take-home salary. So, if you earn 1 lac a month, EMI should not be more than Rs. 25,000.
Even with a loan, a down payment is required to secure the home.
This will help you save on overall interest payments. You must have a sizeable amount to make a down payment.
A home loan takes at least 10-15 years to pay off. If you are in your 20s, make sure you have a stable career before jumping in to buy a house.
Buy a home if you are going to stay in it - don’t treat it as an investment. If you’ve been renting for long, consider buying a home, keeping the above factors in mind.
Owning a house early on in life is a matter of pride, and can give you a sense of security. But - make sure all your finances are in order before you take the plunge.
Mutual Fund investments are subject to market risks, read all scheme related documents carefully.