Buying a home is a dream for many. While some try to make this a reality by saving from an early age, others enter the buying circle a little late. But almost everyone wonders, what is the right age to take one of the most important decisions of life? 99acres asks the experts as to what they feel is the right age for buying a property.

Buying at an early age (25-30)

With the rising average salary of people in India, their purchasing power is quickly improving. Financial planners and institutions increasingly witness youngsters aged under 25 years entering the buying circle. “There is no disadvantage in buying a property at an early age as it is an asset for a family. However, if one can delay the decision and accumulate more amount to pay for the property as the down payment, the percentage of the loan at a later stage can be reduced. The purpose is to keep the loan amount minimum,” says Ayush Bhargava, Chief Executive Officer (CEO), Bhargava Financial Planners.

“It is generally noticed that for married couples with children, buying a home comes second to their children’s education. However, for an unmarried person, it is mostly a topmost priority,” adds Bhargava.

However, if you are considering buying a home at an early age, keep the following points in mind-

  • You should have an emergency fund to meet the expenses for atleast 8-10 months, including the Equated Monthly Instalments (EMI), so that in case of a job loss or an emergency, you can use this amount and not your savings
  • If you are unmarried, you should have life cover (insurance) in the form of a term plan of at least 125 percent of the total home loan. However, if you are married, it should be 200 percent of the home loan availed. This will ensure that in case of any unforeseen event, the home loan amount is paid off, and your family's future expenses are taken care of
  • Do not try to prepay the loan before five years as there are various tax benefits available
  • EMI should not be more than 30 percent of your monthly salary as it can affect your lifestyle
  • Try to save an amount equal to the EMI, and this should be invested in a financial asset for more than five years. Once a corpus is built, you may think about prepaying the loan

Buying at a later stage (40+)

The most significant advantage of buying a home at a later stage is that one may be able to buy it out of his savings and may not opt for a home loan. This can be done with the help of a planned long-term investment. Also, with constant improvement in technology and lifestyle, one may find a good deal with more facilities.

However, there are a few disadvantages too of entering the buying circle later in life. After 40 years, an individual starts approaching his retirement and thus wants to accumulate funds for retirement. If a home loan is availed at this stage, it may hurt him during retirement.

KishorKumar Balpalli, Founder, Rajashree Capital, avers, "People buying a house at a later stage might not get longer loan tenures." Banks generally do not allow loans for more than 15 years at such an age. Also, you need to consider other goals, such as children's education and marriage.

The ideal age (30-35)

As per Balpalli, the ideal age is "when you have accumulated 30-40 percent of your home budget and you are able to easily service the balance amount through EMI either individually or jointly with your spouse. Do not forget the contingency fund which you need to set aside (equal to at least six months of your monthly expenses), and health and life risks that have to be adequately covered."

Typically youngsters in metros arrive at the above equation when they reach the age between 30 years and 35 years. Also, the salary at this stage is higher than at an earlier age, which may help them get a good loan deal from the bank for 20-25 years.

Bhargava says he has seen people regret in both scenarios, mainly because people do not plan. He adds, "People who do not plan for a goal like buying a home at a later stage, regret as they end up compromising on other goals. Also, there are many who buy a home at an early age without planning for repayment of loan and emergencies."

In the end, it boils down to how well one has planned for the set goals. With appropriate planning and steady guidance, buying a property can become much smoother, irrespective of the investment stage.

See our latest webstory on 25 or 40 years - When should you buy a house?