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Is it a good idea to buy your dream home early in life?


A dream home. That is what most working people aspire for these days, unless they already own one. But when should you buy a house? Should that be early in your career or later when you have a family and good control over your finances?

Suresh Sadagopan, managing director and principal officer at Ladder7 Wealth Planners Pvt., says, “In my opinion, it may not be a great idea to buy a home early in life since most people tend to focus on their careers. It may be better to stay closer to the office as long as you are working. Buy one later when you intend to settle down, after deciding on the choice of your city or town. I would rather suggest that you save money now and be ready to buy a home in the future.”

Echoing similar views, Rinju Abraham, vice president of Scripbox, says, “Home buying decisions are individual and situation-specific. However, one should not buy a home early in life. Amid the rapidly changing times we live in, we suggest that individuals consider purchasing a home only after they have identified the city they want to settle in for the long run. Given the substantial financial commitment required to purchase a property, it is prudent that one achieves a certain level of career maturity and financial stability before taking such a decision.”

When should you buy a home? That, experts say, depends on individuals, their financials, and the situation they are in. However, Sadagopan says, “We all come to a particular point in life where probably we are married and have a family. And we know that we no longer want to be shifting houses and places because it affects the children’s studies. Once you decide not to pursue any career opportunities outside the city of your choice, that would be the ideal time to buy a house.”

Things to consider: When buying a home, you must consider these factors: the location, type and size of the house, and its proximity to shops and schools. Then there are the financial considerations: Is it affordable? How much corpus do you have for a down payment? Do you meet the eligibility criteria for a home loan? Does the house fit in with your current income levels—this determines how much you will need to pay in equated monthly instalments, current interest rates, etc. Abraham says, “A commonly used rule of thumb in personal finance for buying a house is the “Rule of 60“. This rule recommends that the cost of your home should be approximately 60 times your monthly salary. This can serve as a helpful starting point for determining the price range of homes that align with one’s financial situation.”

Mint take: Unlike other financial assets such as mutual funds and equities, real estate lacks liquidity. Fluctuations in supply and demand, high transactional costs and tax implications add to the cumbersome process of buying and selling realty investments.. Hence, you must only zero in on a home that personally suits your long-term needs.

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