Owning a house is everyone’s dream. Besides offering a sense of financial security, it also gives a feeling of freedom and pride. Many people take decades to fulfill this dream, while some manage to take the risk plunge early on in life. But the idiom, the sooner you start, the better returns you will reap is of complete relevance when it comes to real estate.
The following reasons will leave you convinced why stepping into the real estate game at a young age is a good idea.
· You can repay the home loan at your own pace, since you have the luxury of time
· You can avail a home loan easily
· You develop better financial management skills
· You save a considerable amount of rent that can be utilized for paying EMIs
· You can retire early by generating passive income from the real estate investment
Get started in real estate investing and get a stable income flow, tax advantages, portfolio diversification, and equity. Real estate has undergone several transformations in the past few years; from increased mortgage rates to being hit by inflation and a scarcity of building materials. But the market is set to witness a strong revival. Residential sales have already recorded annual sales growth of 60%. Housing prices are expected to surge nearly 7.5% all over India: 4-5% in Mumbai and Delhi, and 5.5-6.5% in Bengaluru and Chennai. The RBI has raised the benchmark lending rate by 35 basis points to 6.25%. This will push the interest rates on home loans, but the upcoming period remains a conducive time to invest in all segments of real estate. Preparing ahead of time will ensure you are setting the right goals and meeting your financial commitments. So, take the opportunity to turn your “dream” of buying a home into a “reality”.
Finance your first home purchase
Why invest in a home ?
Building a “dream home” in the first half of life is a goal reigning supreme on everyone’s bucket list. We dread the thought of stepping into retirement without being a homeowner. It is a financial and also an emotional investment. It is important that you outline a strategy to fulfill this dream.
What are the costs to be considered ?
Start by assessing how much money you will need to buy the house that you want. Consider costs like registration fees, stamp duty charges, interiors, and inflation. So, how can you arrange funds for this seemingly huge asset? The best options boil down to borrowing a home loan or building a corpus from your investments.
How to achieve the required corpus ?
Financial institutions lend you a maximum of 80% of the property’s value as a home loan. The remaining 20% needs to be raised on your own. To cut down on the total interest cost, pay at least 60% of the value from your pocket and the rest through a home loan. Let’s assume you will buy a house after 8 years for Rs. 2 crores. You plan to contribute 60% of the total market value of the property, which is Rs. 1.2 crores. However, considering the impact of inflation at 7% for 8 years, the amount needed will be Rs. 2.06 crores. This is the value you must plan to save through investments. The asset class offering the chance to collect this money is equity. Invest in top-performing SIPs and fund your dream home. Remember to start early and stay longer.