Would it be wise to invest in a home early in your career?

Authored by Annuj Goel, MD, Goel Ganga Developments

Buying a home is that one dream, which is harboured by every young man or woman. Many people take a lifetime to buy their own house while some achieve it early in their careers. While young, most working professionals do not think about owning a home. However, if they start taking the baby steps towards owning an abode early in their career, they might own property very soon.

Here is a lowdown on why one should plan and go for a property investment early in their career:

Lower EMIs- When you are young, there is ample time for you to pay back the home loan. When you are in your mid-20s (20-25 years), you can easily avail of a home loan of over 20 years. The financial institutions are also willing to offer longer-term loans. With a working life of 25-plus years, you will own your sweet home early in life.

Moreover, as you grow in your career and the salaries get better, you can easily prepay the loan to get debt-free. At a time when you are unmarried, have no children as well as limited liabilities, that period can turn out to be the best time to invest in a property. Property investment in your 20s might turn out to be the best decision of your life.

Tax benefits- When you are earning well, tax benefits and tax savings are a top priority. The acquisition of property early in your career can support you in saving a significant amount of tax. When you take a home loan to acquire a property, it is eligible for tax benefits under Section 80 C of the Income Tax Act. A home loan comes with multiple tax benefits for a homebuyer. When you are young and invest in an under-construction home, you are eligible for a pre-construction interest rebate and can claim a deduction on the interest paid on the home loan.

According to the Income Tax rules, deduction in five instalments from the date when the property is acquired or construction is complete is allowed under the IT Act. However, the maximum deduction is capped at Rs 2 lakh. If your home loan falls under the ambit of section 80EEA, you can also claim an additional Rs 1.5 lakh claim.

Asset acquisition- Buying a property at an early age will make you the owner of a reliable and appreciating asset. In the back of your mind, you can rest assured that even if nothing works out, you have an asset to bank upon. If you purchase land in your 20s, its value will appreciate and the RoI will be exponential after 10-15 years.

Rent saving- If you have decided to invest in a home early in your career, it can save a significant amount of rent for you. When you acquire a home, you can avail of a home loan and the money that would have gone into rent can be utilised in the form of equated monthly instalments (EMIs). With the passage of time, the amount of EMIs also reduces, the loan gets reduced, and eventually, you get your own home very early in your life.

Conclusively, a property investment early in your career is a wise decision, given the income range and other aspects appropriately covered. However, experts caution that youngsters must weigh all the factors before going for a home loan as in cases of job loss or recession, or any unforeseen job loss, the situation might get tough and repayment might be difficult. If you have your basic needs duly covered, only then, you should go for a property.