“Is it the right step for you when you are just starting your career?” Ishan’s father asked, raising his eyebrows. “Son, this is the time to save for the future,” added his mother. “That’s what I am doing mom,” Ishan, who is an executive in a leading global information and measurement company, tried to justify the decision of a lifetime. Ishan, who has an economics background, explained the logic behind his big decision, buying a home, which was convincing enough to get approval from his parents.
According to the youngster, buying a home under 30 gives an opportunity to enter the market early, which, put simply, means that you get a property at a lower cost than what you have to pay for the real estate 10 years down the line. Buying a house under 30 enables you to acquire a property at the bottom, and then opens up the option to sell it at the top, ensuring sure-fire returns on the investment.
The Indian real estate market is starting to recover after witnessing a sluggish phase over the past few years. This makes the setting picture-perfect for real estate investments. If you are under 30, working, saving, and dreaming to own a home, then here are a few things you might want to consider.
Determine Your Need – Ask Yourself Why You Are Buying a Home?
Different people buy property for different reasons. You will have to figure out in the first place why you are buying the property. Some buy a property to make it their home, while others view the purchase as an investment that can give them a steady cash flow in the form of rentals. In both cases, one thing is common — capital appreciation. So, even if you are buying a property to make it your home, you can still earn a handsome return if you plan to sell the property in the future.
Next, Define Your Budget
Assuming that you will avail a home loan to finance the property, any misadventure might lead to a financial disaster. If you are planning to buy a property as an investment, then the locality will play an important role. A property in a well-established neighbourhood will cost you more, but it will give you a solid return on investment in the mid-to-long term. If you are thinking about making the property your home, then decisions like whether you will need a 2BHK or 3BHK apartment will come into play. Whatever you decide, don’t stretch yourself beyond your financial limit.
Do You Have a Stable Source of Income to Pay Off the EMIs?
A home loan is a lengthy financial commitment, so make sure you have a stable income source, with which, you can pay off the EMIs on time. Defaulting on your home loan will not only hurt your credit score, but it will also lead you into a debt trap. Try to make as much down payment as possible to keep your EMIs under control. As a rule of thumb, the EMI figure should not exceed 40 per cent of your monthly income. Also, keep in mind future financial commitments like property tax, repair costs, and maintenance charges for your apartment association.
Remember to Make Full Use of Tax Exemptions and Tax Incentives
Apart from Section 80C, there are a variety of other tax-related benefits that you can avail to save big. Under Section 24B of the Income Tax Act, homeowners can claim a deduction of up to Rs.2 lakhs on their home loan interest if the owner or his family reside in the house property. The same treatment applies when the house is vacant. If you have rented out the property, the entire interest on the home loan is allowed as a deduction. The Union Budget 2019 has also extended certain tax benefits to the homeowners. It is always a good idea to consult a tax lawyer to know more about tax exemptions under the Income Tax Act.
Aspiring to buy your first home can give you an electrifying rush of adrenaline, however, you should not rush into executing your idea without proper planning. There is no denying that a property of your own can give you security and boost your financial well-being, but still, take your time to consider the above-mentioned factors before buying a home that will help you steer clear of many headaches in the future.