Srijit, a software engineer in his early 30s, had always wanted to buy a home. Growing up in various rented apartments through his childhood and teenage years, he saw his parents coping with rent hikes and the uncertainty of shifting. After landing a plum job in an IT giant, he started thinking of buying his property.
Initially sceptical about applying for a home loan in his early 30s, Srijit discussed the matter with his peers and did some online research, too. Soon after, he realised the numerous benefits of applying for a home loan early. Not long before, he had applied for a home loan at a nationalised bank and had been approved!
Are the early 30s the right time to plan for your dream home? In this blog, we’ll explore the key benefits of taking a home loan at an early age.
Why Should Millennials Apply for Home Loans Early?
With real estate prices skyrocketing in sync with urban developments in the country and the uncertainty of inflation, buying a property early can be a wise move for millennials. Here’s why:
Loan tenure and EMI flexibility
Those opting for a home loan in their early 30s get a longer, more flexible repayment tenure. Most Indian banks offer a home loan tenure of 15-25 years. Applicants can lower the EMI amount by choosing a longer repayment duration. This can be helpful when your career is growing, and you can manage your expenses better.
Low-risk factor
Typically, Indian banks and home finance companies consider younger home loan applicants as low-risk. They have a long career ahead. Millennials are likely to move up the career ladder, and a hike in salary makes loan repayments more manageable. So they get wider options to pick from. With proper research and effort, they can obtain lower interest rates on home loans. Their overall loan eligibility is higher than that of other senior applicants.
Fewer financial responsibilities
Millennials typically have fewer financial responsibilities than the senior generations. Many of them are still single or married and may not have kids yet, for example. They do not have to deal with expenses like children’s education and welfare. They are in a better position to close their home loans without multiple debts like car or personal loans.
Early loan closure
Taking a home loan early also makes it easier to clear the loan early. Those growing well in their careers can save enough money to prepay the remaining loan amount during the middle of the tenure. This helps them clear the loan and avoid paying the interest for the entire duration. Millennials can then manage their finances better in their 40s and subsequent years.
Strong credit score
Early in life, opting for a home loan helps build a solid credit score. Those applying for a home loan in their early 30s and paying on time can build a good credit score. This allows them to apply for other loans and credit cards. Additionally, they can get lower interest rates on car or personal loans in the future.
An appreciating asset
Owning a property creates an appreciating asset over the years. So, investing in a property early in life can fetch good returns later. Millennials who buy a property early in such cities can later rent it, even partially, and earn a decent additional income. This can help them cope with inflation in their mature years when their expenses multiply.
Shield from property value rise
Property prices in the metro and developing cities in India are increasing with time. Property prices have increased in sync with rapid urban infrastructure development in recent years. Property prices in areas where metro routes are expanding are seeing unprecedented price hikes.
So, buying a property early in such regions helps millennials avoid overstretching their financial limits. They need not move far into the suburbs looking for affordable properties.
Things to Analyze Before Applying for a Home Loan Early
The benefits of early homeownership are undeniable, but you should analyze some key factors before applying:
- A stable source of income to cover EMI payments consistently.
- A credit score of 750 or above.
- Hidden charges like loan processing fees, prepayment charges, and more.
- An emergency fund that covers the EMI for a few months to cope with emergencies.
Wrap Up
Buying a home early in life can be a strategic financial decision for millennials. The benefits are apparent and continue even after the loan repayment is over. Like Srijit, you can consider applying for a home loan early. Just ensure you do the research and comparison well and choose a trusted bank or home finance company. It will be a major move to secure your future well-being.
