Points Young Buyers Need To Consider Before Taking A Loan
Long gone are the days when people used their retirement money to buy a house in their 60s. Today, Indians in the age group of 20 and 30 form a large part of the homebuyer base. However, if you planning to invest in a property in your 20s using bank finance, you must first consider certain points.
Are you ready with the down-payment?
Under the works are plans that would enable buyers to use bank finance to make home purchases possible with a minimal down-payment. But, as it stands today, you have to pay 20 per cent of the total value of the house as down-payment. On top of that, you will be paying at least six per cent of the property value as stamp duty (this charge differs from one state to another) and one per cent as registration charges. Also factor in several other big and small payments that you will have to make from your own pocket.
What is your financial position?
It is great to put your money in real estate in your early 20s if you do not have other running loans. However, in case you are still re-paying an education loan along with an automobile loan, taking a home loan might put you in a tight spot, financially speaking. No doubt, banks would be willing to lend you money as long as you maintain a healthy re-payment history, but you must also factor in your personal constraints before burdening yourself with multiple loans.
Are you settled, career-wise?
In the beginning of our professional careers, we are often unsure of how things would shape up in future. But, taking a home loan during this period would mean our choice in matters of switching careers would be limited. As you have a home loan to pay, you would rather stick with one job or career path. Make sure you have the right job and are on the right track as far as your career path is concerned before you start applying for home loans.
Do you have a fallback option?
When you take a joint loan, there is an assurance of your partner paying off the loan in case you, owing to some unforeseen event, are unable to do so. Considering you are in your 20s and will be a single borrower, the sole responsibility of paying the loan lies on your shoulders. What are your options in case you fail to pay the loan? Property purchases are meant to provide you security and better return on investment. But, the plan whole might fall apart in case you are not able to re-pay the loan. Be certain that you have a fallback option in case difficult times strike.
Do you really want this?
You term your friends' preferences as silly and dismiss them with a shrug. Rather than "living a large life" and wasting your money, you would invest it into something concrete, literally. A prudent thought, indeed, but there is more to home buying and borrowing than might appear initially. Think and rethink before you are complete convinced that that is what you actually want. Buying a home should be more of a practical decision than an emotionally-driven move. Evaluate all the pros and cons before you start looking for the cheapest loans.