How is it Advantageous to Avail a Housing Loan when you are Young?
Most of the millennial youngsters in our country are getting a six-figure monthly salary right away from the start of the career. While doing all the things that their young spirits thrive for, they still end up saving a lot of money for their dreams and responsibilities in life. At 24 or 25, they are ready to buy a dream home with a housing loan and look to settle down in life as soon as possible.
And most of their peers and elders have different opinions about taking a loan at this early stage of life. There is a factor of doubt and even the millennials themselves have second thoughts about making such a decision. Is it a wise and sensible decision? Yes, let us see how.
1. Gives ample time to research and get the best deal:
For a young buyer, the options will be vast and he/she will be able to evaluate the options individually and choose the best one. There is no need to rush for a young buyer and he/she might also be looking to purchase their first home. The youngster can also apply for the PMAY scheme to avail benefits of a home loan, which is an interest subsidy scheme.
2. Easier to resettle the huge loan debt:
Lenders these days provide home loans for almost all age groups from 22 to up to 70 years. For young people, the tenure can go for up to 20 years. If a young borrower gets a housing loan at 25 years, he/she will be able to settle the debt by the age of 50 to 60 years with long loan tenure. So, it is always good for a young millennial to get a loan and buy his/her dream home sooner rather than later.
3. Better eligibility for getting the housing loan sanctioned:
Borrowers who are young have better chances of getting their loan sanctioned. This is because there are high and imminent chances of an increase in salary, which is a vital factor that is considered by the lender. There are also chances of a good rise in salary over the years for someone who is young. For instance, Ms. Gopika, who is in her mid-twenties says it was easier for her to avail a home loan for purchasing one of Galleria Residences’ 2BHK flats for sale in Tambaram, Chennai than her father whose application was rejected due to his age. If still you are facing issue read the 6 ways to boost the home loan eligibility criteria to overcome from it.
4. Young millennials have fewer responsibilities:
For a young person, the monetary responsibilities are fewer than someone who is in his/her mid-thirties. There would be few direct dependants to a young loan applicant and thus the person has a better FOIR (which is Fixed Obligation to Income Ratio).
A millennial who is working has almost negligible or no obligations at all and without previous credits or loans, he/she would have a -1 CIBIL score. This enhances the chances of getting the loan sanctioned, with a good loan amount. With no other responsibilities, they tend to repay the EMIs in a timely manner without default.
5. Better options for repayment methods:
While sanctioning a home loan and deciding on eligibility, lenders use an ergonomic step up or FLIP method. Under this evaluation, the initial EMIs are low and over the time the EMI increases. They consider that a young borrower usually gets a decent income at the start as he/she is a recent earner and the income is expected to grow gradually in the future.
6. Other factors to consider by a young borrower:
The buyer should have enough funds to avail a home loan because he/she has to contribute at least 20% as the margin money towards the loan. Apart from that, there are also additional processing fee and other charges for getting a housing loan.
That being said, there is no particular apt age of the wrong time for people to avail housing loans and buy either luxury apartments in Chennai or even villa projects in Chennai. At last, the individual decision is based on the mental and financial capability to deal with such a huge debt. Each person takes their own time to buy a home and settles down and they should consider all other liabilities in the future before taking the decision.