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Age doesn’t matter when it comes to real estate success. However, investments made at an early age can reap huge benefits in the future, with proper financial planning buying a house in your 20’s is an achievable goal. If you are a young earner looking for stable investments, here are some benefits and tips that you need to know before investing in real estate.
Tax benefits: Investing in real estate at a young age has great tax benefits. As per the income-tax law, an individual can avail of the tax benefits for the principal amount of home loan. Hence, availing a home loan to fund your dream home can help you get a tax rebate in your yearly income tax return.
Great credit score: Getting a home loan at a young age will help you establish good credit history, which eventually means a great credit score, hence ample financial opportunities
Personalize and customize your space: There won’t be any rental agreement to prohibit you from tearing your wall. You can paint, renovate, upgrade your home once you own it.
Turn your home into a money-making property: With time the value of property tends to increase when you sell your property all the returns will be yours, Also you can turn it into an income-earning rental property.
Tips for Buying a House in your late 20s
Be Financially disciplined
Buying a house in your 20’s is not easy. It’s not as simple as you having to save 20 per cent of your income every month. But you need to set a goal and put aside money consistently for 8 to 12 months before you start with the home-buying process. To build up your down payment you need to start cost-cutting, avoid spending abruptly and try to increase income flow. You can also consider investing in stocks, bonds, PPF, mutual funds etc for good returns.
Being aware of your needs in terms of housing is very important, as a millennial who is saving aggressively for a house that fulfils all the needs and also helps in cost-cutting could be a better option compared to the one that causes you to overshoot your budget. Listing down your requirements in terms of amenities, location, pricing, etc is important, as these are the factors that decide the cost of owning a house.
Consult a real estate experts
Making a mistake in real estate decisions may lead to a huge loss if not planned wisely. To prevent this you need to have all the information regarding the property you are interested in and find a good mentor. You can also learn from real estate experts or speak to people who started with real estate investment early.
Take a loan that you can easily repay, as at times home buyers fall prey to unmanageable EMIs and fail to pay later. Consider longer loan tenure as it helps to reduce the size of your EMI, while longer tenures lead to higher interest, you can reduce your interest outgo by periodically making prepayments in tune with the rise in your income. Consult at least two to three reputed banks, to understand the nuances of the home loan process.
Be Prepared for other expenses
Apart from the down payment, there are many other expenses like registration charges, stamp duty, memorandum of title deed charges, interior cost there are also legal fees, home insurance, brokerage fees, and any other charges that might cause hindrance if you don’t plan. While it might be difficult to accurately factor in all the non-loan charges, try to have at least an estimate, and strategize accordingly.
It might be challenging in your 20’s to fund your spacious dream home. Therefore, do consider buying a starter home like a spacious 1 BHK, or a compact 2 BHK, that fits your budget. Your income will increase with age, and you can always consider selling your starter home to raise funds for a home upgrade in your 30s and 40s.
Don’t buy a house that you cant afford
It’s important to buy a home you can afford. By afford we mean, think of your mortgage, taxes, fees, insurance, and maintenance whether they fall in your budget. It simply states that an approved mortgage does not mean that you have to buy up to that limit. Homeownership is smart, but it can be expensive if you are not prepared.
Buying a home in your 20s isn’t impossible, but if you are ready to stay in one place for a while and with proper financial planning, regular saving and clean credit history buying a house in your 20’s will be very much rewarding.