7 reasons to buy a home in your 30’s

If there was an Indian Dream (similar to the popular American Dream), then among other things, it would involve buying a home. As Indians, we have always loved investing in real estate as it is tangible and not an investment that exists only on paper. While that mindset is slowly changing, the importance of owning a home cannot be undermined. Even today, buying a home is probably one of the most common financial goals of every Indian. It has financial as well as emotional value and is considered to be a sign of success in most households.

That brings us to a pertinent question – what is the right age to buy a home?

Assuming that you are a working professional and will rely on a home loan to finance your purchase, should you buy a home early in your life (between 25-30 years) or later? While we believe that the best time to buy a home is when you are financially ready for it, we always urge prospective home buyers to start early and buy a home in their 30’s. Wondering why? Here are 7 reasons you should consider buying a home while you are in your 30’s.

1.
You are relatively stable in your career

If you look at your career stability, then you are likely to be more stable in your thirties than in your twenties. This is an important aspect since a home loan is a huge commitment and requires a stable source of income to ensure that the instalments are paid in time.

To give you an idea, if you take a home loan of Rs.50 lakhs for 25 years @ 7 %, then your monthly installment would be Rs.35,339. Hence, you would need a regular income of Rs.35K + your regular monthly expenses to sail through. Missing an installment would mean penal interest and a dip in your credit score. Also, the inability to repay the loan can lead to you losing the house and be subject to legal action.

Therefore, it is important to avail of a home loan when you are at a stable place in your career. This makes the thirties a better time to buy a home compared to the twenties.

2.
Optimum loan tenor

A home loan is a long-term loan. Since the borrowed amount is huge, the longer you have to repay it, the lower your monthly instalment. However, you also need to understand that the longer you will repay the loan, the more interest you will pay. Hence, it is important to select a tenor that allows you to repay the loan comfortably without paying too much interest.

Here is an example.

You take a home loan of Rs.50 lakhs @ 7% interest. Here is a look at different tenors and the difference in instalments and interest paid:

Amount (Rs.) Tenor (years) Instalment (Rs.)

Total interest paid at the end of the tenor (Rs.)

50,00,000

15

44,941

30,89,454

50,00,000 20

38,765

43,03,587

50,00,000 25

35,339

56,01,688

50,00,000 30

33,265

69,75,445

As you can see above, as the tenor increases, the monthly installment decreases but the overall interest paid increases. The difference in EMIs is small but its impact on the overall interest amount is quite substantial. If you can afford Rs.33-35k per month, then by pushing yourself and paying Rs.38.7k, you can save around Rs.13 lakhs over the tenor of the loan. On the other hand, if you opt for a tenor of say 15 years, then the EMI can increase drastically making it difficult to sustain.

Hence, in your thirties, with at least 30 years of professional life in front of you and a fairly decent salary, buying a house makes more sense.

3.
Wiser spending habits

When you start working after around 15-20 years of education, you have dreams and aspirations. Most youngsters are a bit reckless with their monies because they have waited long to be able to earn and spend without being answerable to their parents. Therefore, they buy the latest gadgets, travel frequently, eat at the best dining spots in town, buy the latest brands in clothes and accessories, etc.

However, with age, you learn the value of savings and investments and start getting wiser with your money. In most cases, people clear their student loans (if any), pay down their credit card outstanding, and other small debts. This makes the thirties the ideal time to commit to a more long-term & rewarding financial commitment – buying a home!

4.
Availability of funds for the down payment

Most people plan in advance before buying a home. This means that they work on their finances, create a small corpus for emergency expenses, budget their monthly costs, and have funds for the down payment on the house. All this needs time. Even if you start working by say, 23-24, you would need around 8-10 years to stabilize your finances and put money aside for the down payment.

This is an important aspect since a larger down payment would reduce the home loan amount and help you buy the house of your dreams. Many people who buy a home in their twenties try to avail of a personal loan for the down payment requirements or borrow from their family/friends. While this can work, it puts a lot of burden on you for the first few years after buying the house.

5.
More clarity about where you want to settle down

Buying a home is akin to putting roots in more ways than one. Hence, knowing where you want to settle is a prerequisite to buying a home. Over the last two decades, youngsters have become highly mobile and want to be global citizens. They are open to exploring jobs in different corners of the country and the world. Post-COVID, remote working has opened the doors to a more flexible living destination as professionals don’t have to be bound by the proximity to the workplace. In fact, in Mumbai, many potential homeowners have started looking at properties in Dombivali, Kalyan, Panvel, and Bhandup as the rates are affordable and many reliable developers have turned their attention to these areas.

In such times, it is important to be sure about where you want to settle down. This clarity is better when you are in your thirties and understand your likes and preferences better.

6.
High return on investment

Here, we would like to look at a home as a real estate investment. If you compare all investment avenues, real estate is the best in terms of returns with relatively lower risk exposure. While there are lull periods, over time, property prices generally increase and offer a good return on investment. In fact, real estate prices increase with inflation, that makes investing in it the best hedge against inflation in the long run. Real estate can provide returns in two ways – capital appreciation and rental income in case you’ve rented out the apartment.

To get the maximum benefit from investing in real estate, you need to give it enough time. In the long term, real estate properties have the potential of generating good returns. When you buy a property in your thirties, you give it enough time to increase in value by the time you retire.

Tips to buy home in your 30’s

Don’t over-stretch your budget. Buy what you can afford. You can always sell the property and upgrade to a better/bigger one later.

7.
No leakage of funds due to rent

Unless you are staying at a house owned by your parents, you are likely paying rent. Depending on the city and the area you live in, this can be a substantial amount. The money paid as rent is a leakage of funds since it does not offer any returns. If you buy a house with an EMI close to the rent amount, you get a home and enjoy returns on your investment. Buying a house in your thirties allows you enough time to clear your home loan and the property rates to rise to offer a generous ROI.

Tips to buy home in your 30’s

Don’t over-stretch your budget. Buy what you can afford. You can always sell the property and upgrade to a better/bigger one later.

Over time, as you grow in your career and your income increases, pre-pay the loan in parts and ensure that you pay it off completely within 7-10 years.

Ready-to-move properties are costlier than under-construction ones. If you have budget constraints then look for reputed builders who offer amazing properties at affordable prices.

Clear all smaller loans (if possible) before availing of a home loan.

Consolidate your investments and talk to an investment advisor to help you with building a portfolio of investments around your home loan.

Summing up

If you are a financially responsible youngster and have managed your money efficiently in your twenties, then buying a home before you turn 30 is a commendable effort. However, for most people, waiting until they are in their early thirties is a better option as it gives them enough time to build their savings and credit score. It also gives you adequate time to research the market and look for opportunities to buy a home at an affordable price.

At Marathon Realty, we understand that buying a home is probably the biggest single purchase made by most Indians. We also understand the sentimental value of a home. We build spaces that are focused on YOU – the person who will make the houses we build into HOMES. Our projects at Bhandup, Kalyan, Panvel, and Dombivli have attracted a lot of people in their 30’s for the balance they offer between cost, quality, accessibility, and style.

If you have been thinking of buying a home and speculating if this is the right time, then we hope this article sheds some light. If you have any questions, feel free to write to us.

About Marathon Group –

Marathon Group is a 50-year-old Mumbai based real estate development company that has completed over 80 projects in the city. The group is proud to have provided homes for more than 5,000 families, retail space for 400 retailers and offices for 350 businesses.

Marathon is currently building several townships in the fastest growing neighbourhoods, affordable housing projects, ultra-luxury skyscrapers, standalone towers, small offices and large business centers, with projects spread across the Mumbai Metropolitan Region (MMR), with over 18mn sqft of land currently under development, and a plan to deliver more than 15000 homes in the next 5 years.

For more information about the company, please visit https://marathon.in/ or you can visit Facebook, LinkedIn

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