For almost everyone who finds employment and finally kick starts their career, Their early thought is L to either buy the car or grab the keys to their dream house. Most people tend to spend the largest portion of their money on purchasing a house, which is often an apartment.
There has been a drastic shift in the trends in recent years after Covid-19. The end of the COVID-19 pandemic has brought a different mindset and a desire for independence in many young professionals. As such a mindset prevails, It exhibited a trend to buy homes early in their careers.
According to reports and new studies by real estate companies and home loan institutions have found that the average age for people getting home loans has declined from about 40-45 years a decade ago to being in the early 30s and, in some cases, the mid-to-late 20s. From a conventional perspective, society often calls for us to “settle down” quickly. And owning a home normally is one major milestone along the way.
When In Life Is The Right Time To Take Such Big Steps?
To be very honest there is no right time to take such steps if you have extensive money beforehand. Having enough funds to bring the dream house to reality is a necessity. Hence, The right time to buy a house is when one has sufficient funds.
According to experts and experienced professionals, You should possess at least 40-50% of the property price as financial investments with you, Then your monthly EMIs, or loan payments, can remain manageable.
The urge or need to buy a house usually comes with the arrival of mid-career, around the age of 35 to 40 years.
This also becomes easy if you are married and have a partner who earns. If you both earn, your combined income could give a big hit for you and it will become easy to manage house chores and save for asset investment such as Your joint income will be higher ensuring that EMIs do not exceed 25% of the combined households’ income.
At that time, you can already have a better estimate about the careers you prefer and settle in your career paths and probably relocate in the city where you’re staying for a long term.
Is It Sensible To Purchase A Home And Take Out A Mortgage, Just A Few Years After Starting Your Career?
From financial as well as practical points of view, buying a home right when you have begun working would not be such a bright idea. Here Are The Key Factors:
EMIs Creates Financial Burden
When employees return to work, they will naturally want homes close by in order to reduce the length of commutes. Homes accessible within less than half an hour from most office locations cost much more. In India’s biggest cities, even a one-room apartment edeal for a single person costs over Rs 50 Lakh.
Now, assume you can get an apartment priced at Rs 50 Lakhs. In fact, the usual bank loan for such an apartment would be 80-90% of its price, and you get about Rs 40-45 lakh. The monthly income needs to be at least Rs 60,00,000 to around 1.5 lakhs for such a loan to be approved.
Assuming you earn that much and taking a loan of Rs40-45 lakh at 9% interest over 20 years. And for the down payment and fees, you will need to save around Rs 10-5 lakh. More than 60% of your salary would go towards EMI, whereas financial experts recommend keeping all loan payments in the range of 30-40% of income. If you have some other loans, it may become too tight financially.
Play Smart, Rent Out A house
Instead of taking such a huge EMI, think of renting. You will find a place for ₹25,000 a month or even share a costlier apartment for ₹25,000 each. This is much lesser than the EMI.
This will make your savings growth in the long run considerable. For instance, for every amount of money put aside every month at 10% annual return you will have saved enough for that amount of money to reduce some burden as you purchase the house. Your salary most likely will have increased.
Non-Monetary Factors
There are also good non-monetary reasons to delay buying a house until your mid-30s:
- Job Changes: You may often change jobs or cities at the early stages of your career. You may become less flexible to move to a different city for a better job opportunity if you commit to a property.
- Growing Family: You may get married or have children. The space needs will change and you might end up having to buy a larger apartment later.
- Career Breaks: If you desire to take a break to pursue further education or have a sabbatical, managing EMIs would be really challenging without a steady income source.
whereas buying a house is attractive, smart money will often rent and invest until one is firmly established in their career and life situation.
