Why it is advisable to plan early in house purchase

There is an old saying that early planning always pay back good reward and the same follows in own house planning!!! Who says that one has to wait for few years before stepping out of one’s rented accommodation to own home? Whether it’s your first job or you are a settled professional or in govt. or PSU, young people at early stage have ample of time to plan well for their first home and taking the responsibility of being a homeowner. Planning a house early benefits you in many ways as in all circumstances, property gains appreciation year by year, one gets his/ her permanent home, investment of money in the most secure medium and mode of earning in old age time etc. So, if you go to purchase property early it means you are securing yourself and for your family for the rest of your life.

Major benefits of early purchase of house:

Early house planning benefits you in tax deduction, controls monthly expenses, creates sense of saving and responsibility all together. When you take loan to purchase a property then you become eligible for tax deduction against the interest paid on the loan but always remember that it is not applicable on under construction homes. Maximum available deduction of against the interest paid on the home loan is Rs. 2 lakhs in case of a self occupied property and there is no such restriction against interest paid on the home loan in case where the property has been rented out. Apart from this, your eligibility for deduction against the principal repaid under Section 80C also increases.

2. The investment in house provides a hedge against inflation as the property price appreciates. When one exits the property, once can reinvest in property or utilize the money without caring about the impact of inflation. The duration of housing loan is for a longer period. Hence, starting early ensures that one can repay the loan early. On the other hand, if one starts late, the loan extends till higher age which is not recommended.

3. Also in the early years of life when one starts earning, the tendency is more towards spending and less towards savings and investment. Hence, investment in early years ensures that the money is directed to the right channel which reaps positive results as real estate appreciates in long run. So early planning is always better!

If in case property is bought for investment purpose in an under developed or developing area then also it is sure to see a good price appreciation within few years and in coming future it may benefit you in terms to finance another property purchase, marriage of children, higher study, family members etc.

Challenges in property purchase in later stage:

Buying property in the later age make one’s life challenging in terms of managing rental and daily expenses of family, sudden cost of medicines and education, other miscellaneous expenses and multiplied by rising cost of property.
Property rates are not stagnant in market and on the other hand salary of working professionals is in constant mode. Hence early planning benefits you in terms to manage expenses and pay low EMIs for coming 3-4 years.

If we talk about lending authorities, housing finance companies or national banks, they offer home loan to young professionals, depending on the eligibility, at early stage since they consider growth of the individual and almost zero liability apart from loan. In case applicant is married and both are working then loan eligibility gets higher as they can co-own the property if they apply for a joint loan.

A property purchased at early stage can be bread and butter for its owner too. For many people who can’t earn money in old age or don’t have any source of income after retirement, can go for RML (reverse mortgage loan) that enables senior citizens to avail periodical payment from lender/ national bank/ housing finance company (associated with NHB) for maximum 20 years against mortgage the house while remaining the owner in house only.

As it makes sense to take the decision early and by the time these responsibilities will head towards you, you will strongly face them due to age old commitment. This is one investment that will never fail you, even in the worst of circumstances. There is nothing like having your own home early in life!

Pawan Jasuja- Director, Finlace Consulting

The views expressed in this article are author´s own