A roof that you can call your own is a cherished dream for most of us, and as salaried individual a home loan is the best option. Most potential borrowers however stumble at the very first step, i.e deciding which is the right age to opt for a home loan. Top lenders in the nation offer home loans to individuals aged between 22-70 years for salaried individuals. For the self employed or entrepreneurs, the minimum age limit is 25.
While it may seem daunting to opt for a home loan at a very young age, most financial pundits recommend that availing of a home loan at a young age is a good idea. What was unimaginable even a couple of decades back, is now possible, with top lenders in a pursuit to attract long term borrowers by offering home loans with a tenure of as long as 30 years. Thus, if you are between the age of 25-30, you are an ideal candidate for SBI home Loans or any other top home loans in the nation. In fact there are several advantages of taking a home loan when you are young.
Lesser responsibilities higher eligibility
When you are in your 20s, your responsibilities are fewer. For instance, you may not be married or have kids in your 20s and thus you have fewer dependents. Further, you are likely to have fewer other expenses such as lesser number of loans and other financial obligations. As a result, you enjoy a higher fixed obligation to income ratio (FOIR), an important criteria that lenders refer to assess your creditworthiness.
In other words, considering that 50% of your income is used for your fixed monthly expenses, banks would ensure that your EMI does not exceed 45-50% of your monthly income. The lesser your monthly income is directed towards fixed expenses, the higher are your chances of getting a bigger home loan.
Higher CIBIL score
When you are in your 20s, you may not have availed of a lot of other loans such as car loan, personal loan and a bunch of credit cards. At best you are likely to be using a credit card or two. If you are regular with your repayments on the same, you will have the advantage of a higher CIBIL score. Your CIBIL score is considered a measure of your financial health by a prospective lender. The higher your CIBIL score, the easier it will be to access a home loan at competitive rates of interest. However before you make a home loan application, check your CIBIL score to ensure that your financial health is in order. You can avail of the facility of accessing one free CIBIL score annually, before you make an application for a home loan.
Step up facility
When you take a home loan when you are still in your 20’s, lenders are likely to calculate your eligibility using a step up method, and may offer you the benefit of the same. Simply put, this means that your repayment is structured in a manner where your repay smaller amounts your loan through EMI in your initial years when your income is low. As your income increases the quantum of your EMI also goes up. Thus, the repayment of your home loan does not hurt your pocket. SBI home loans offer you this facility, if you are a new salaried individual.
Time is on your side
Lastly, when you take a home loan at a young age, time is on your side. This means, you have enough time to scrutinise the real estate market closely, check for all the factors that you wish to have in house and even survey the neighbourhood carefully before you make a final purchase decision. Once you have availed of a home loan, repayment of the same in the initial years may seem like a task, but eventually, when your salary increases, it is going to cease to hurt your pocket and you can easily integrate it as a part of your monthly expenses.
Besides, you can make the best use yearly bonuses and other cash receivables occasionally can be used to make bullet repayments to repay your home loan faster. This means you can enjoy full ownership of your home when your are still in your prime and concentrate on other financial responsibilities that increase with age.
Timely repayment of your home loan also helps you build a good credit history, as will be reflected in your free CIBIL score, that you can access annually. A good credit history in turn, gives you access to credit at reasonable rates, when you are in need of the same.
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