What’s the right age to buy a home?

A property is often the most expensive purchase you make in your life. More often that not, it requires years of planning and saving. So, what is the ideal age to buy a home? While it does depend a lot on factors like the city in question, income levels, purpose for buying a home etc., let us talk about the pros and cons of buying a home at various age ranges.

Ages 25-30:

The average Indian starts earning around the age of 21. Saving up for 4-5 years gives him/her time to save up for a downpayment for a starter home in any of the metro cities in the India. At this age, you are likely to be able to afford a smaller home or a home in the suburbs as affordability is lesser, however it gives you a head start in generating wealth via property and a head start in paying your home loan. You can always sell your first home and upgrade at a later stage and reap appreciation benefits. This is probably a good age to invest in under-construction property (check out some pros and cons for Ready vs Under construction property), since they are available for a lesser cost and also have a pre-EMI period where you service only the interest while the building is under-construction.

Pros:

• Instills financial discipline at a young age
• Investment at a younger age that will keep appreciating for a long time
• Longer tenor loans are possible
• Head start in paying off the home loan.

Cons:

• Might restrict the person to one city in terms of career
• Initial EMI’s might be a large percentage of income, leaving little disposable income
• Loan eligibility might be lesser as one is still likely to be in the early stages of their career. Might have to settle for a smaller loan

Ages 30-45:

Most Indians get married around this age and are looking to start a family. An owned home lends to the sense of security one looks for when living with his/her family. Most people are fairly well settled and have significant savings and income (even more so in case of an earning couple) This is the age when you should definitely think of buying a home as you’ve reached a more or less stable state in your earnings and career.

Pros:

• Decent savings and income means a good enough budget for a home in most cities
• Sense of security in owning your own home

Cons:

• Need to plan on slightly larger homes as the family is growing
• Reduced risk appettite

Ages 45 and up:

With kids growing up and going off to college, most people will have reached the zenith of their careers by this stage. A lot of professionals already own homes at this point in their career and some even consider investing in a second home. At the same time ageing parents and children’s education and marriages might result in significant expenses in this age frame. However, if you don’t own a home by this age, you should seriously consider planning for one for post retirement security. You would ideally want to avoid rent expenses once you’ve retired and should aim to pay off your home loan by retirement age. At this age, you might prefer to buy a ready property you can move into.

Pros:

• Mature buyers know what they want and need
• Large selection of homes due to increased budgets

Cons:

• Limited home loan tenor due to age
• Might tie up retirement funds

It has been an old adage that the right time to buy property is now – indeed, the Indian real estate market has been such that there have rarely been any losers. With the advent of RERA, buyers can also invest with greater confidence. Provided you do your homework before buying a home, there is little risk involved as real estate will continue to appreciate in the near future as well.