10 Reasons Why You Should Buy a House
- 28 August 2020 | 866 Views | By Abhinav Mishra
Buying a house or investing in property is once in a lifetime event for most people. If you are in your late 20s or early 30s, you must have started thinking about owning a house. If you talk to your friends and family, they will encourage you to buy a house. Since it is a big decision to make and you can’t be wrong or have doubts in your mind before going out in search of your dream home, it is very important you do proper research and clear your mind. If you are in doubt, this article will provide you enough reasons to go ahead and buy a house.
Is a house an asset?
Anything that comes in your possession can be classified as an asset. Going by that definition, you can say that a house is an asset. If you check the real estate prices over the last 50 years, in the long run, the price has appreciated giving very high returns. Unlike any other asset, possession of home gives you a feeling of bliss which in itself is priceless.
What is the best age to buy a house?
Though you can buy property whenever you are ready, there is an age range in which experts believe you should buy a house. The age range is between 27 and 35 years. If you buy a house in this age range, you would have accumulated 20-30% of the total price of the house and this will be used as a down payment.
Another reason this age range is ideal because you will get out of your EMIs well before your retirement. This will ensure you can accumulate free cash before you retire. It also gives you refinance options at a later stage of your life.
At what age should you not buy a house?
You know there is an ideal age range of buying a house, however, many people do buy a home in their late 30s or early 40s also. Everyone has a different financial journey, still, you should never plan to buy a house if you have crossed 45 and you have to take a loan for a duration of 15 to 20 years.
How much money should you have before buying a home?
The home prices vary from city to city and area to area. So as a rule of thumb you should have at least 20% of the price of the house you are looking to buy. Also, you will have to keep an additional 2-3 percentage for registration charges or some charges the banks may charge you. Another rule is your EMIs should not exceed 40% of your total income.
Is 2020 a good time to buy a house?
The present year is certainly not good for most businesses. The pandemic has hit hard all sectors including real estate. The real estate market has been slow over for the past 4 to 5 years now. The price has not appreciated at the same rate as it did between 2010 and 2015.
The buyers have been sitting on the cash because in these hard times no one is sure of the future and their jobs. Builders have no choice but to reduce a price or offer attractive schemes to home buyers to reduce their inventory. Even the government is taking measures to boost real estate sales. Maharashtra government (in India) for example has slashed the stamp duty to 2% from the existing 5% till December which gives a great opportunity to home buyers to buy a house. So if you were planning to buy a house in the last couple of years, yes, this is a good time to go ahead and close the deal.
Is the real estate market going down 2020?
It is very difficult to predict where the real estate prices will go from here. The prices are definitely not going to rise in the remaining months of 2020. The prices may go down in certain parts of the country where the supply is too high compared to demand. While in other parts, the rates are going to remain more or less the same.
When should you buy a house vs rent?
No matter how much you desire to have your dream home, the hard reality is buying a home today in a good city and decent locality costs a fortune. Popular opinion is that you will have to invest all your life savings when you buy a house. In addition to that, you will have to pay big EMIs every month. In return, you will have a house that will ensure you and your coming generations will never have to think about a place to stay.
Another important thing with real estate investment is you most likely are never going to sell it. If you a financial situation, where you need to always keep cash with you or the EMIs will bring down your lifestyle drastically, it is always better to rent then to buy a house.
In general, it is always better to own a house than to rent it.
Is renting really a waste of money?
From the above discussion, you can say, renting is not a waste of money but a choice you make since you are not ready to buy a house. If you look at it from a different angle, you still have your saving which you can invest somewhere else to get good returns and also save money from EMIs (EMI minus rent). When the right time comes, you can use this investment as your down payment.
Is owning a home cheaper than renting?
The answer is – it depends where you are staying. In some parts, the rentals are too high, it gets in line with the EMIs. While is some areas, the house prices are too high, it makes it different to buy a house and pay huge EMIs.
Now since you are here and thinking whether to buy a house or not, the below reasons will help you in your decision making. Below are the top 10 reasons why you should buy a house:
1. Pride of Ownership
This is the number one reason why most people yearn to own a house. It gives you the freedom to live in a place as per your liking, if your choice changes, you can change the place accordingly. You get to decide the color of the walls, customize your living area or the kitchen. Homeownership gives you a sense of security and stability in life. You also never have to worry about the increase in rent or agreement getting over and a headache of finding a new house.
2. Tax benefits
The government wants you to buy a home and hence it provides you tax benefits when you buy a home. A ready to move house may seem expensive, you can avail tax benefits for the same immediately, as compared to looking at options of moving into a building that is under construction. You are eligible for tax benefits on both the principal amount and then home loan interest.
The other assets can bring total your capital down drastically but when it comes to real estate or a house specifically, you can sleep peacefully at night, knowing, in the long run, the price of your house is going to move north only.
4. Interest rate
The interest rate at present is the lowest. You can get a loan and start paying your EMIs and depending on your location, you may end up paying EMIs less or equal to your rent. Also, fierce competition between the home loan providers has resulted in more flexibility with benefits for you to take a loan.
5. The risk involved is least
Compared to other investments like mutual funds and stocks, investing in a home comes with the least risk. If you do substantial research about the different locations, different builders, and different opportunities to invest, you can buy a property that will not only safeguard your savings but increase the value more than your expectation.
6. Fixed cost
Unlike a rented house, where the rentals increase by a certain percent every year which can be more than the increase in your salary, the EMIs are fixed and so is the monthly maintenance owed to the society.
7. A forced saving
Saving money is not easy for most people. You work hard to make money and by the end of the month, you wonder where is the money gone? If you have the same problem, then buying a house is good for you since you are forced to pay the EMIs which in a way is nothing but saving. Having your property allows you to shift your focus from saving for next month’s rent to saving for your future — whether it’s for your retirement, your child’s college, or other long-term goals.
8. You can take a second loan in case of emergency
Because your home is an investment, it gives you an option to take a second loan wherein you can borrow from the equity you have accumulated on your home.
You may want to keep moving and staying in the same place may not be something on your list. If planned well, you can still buy a house and consider it as a form of investment. Also, you can buy a house and sell it after a few years and earn good profits. Real estate is an inflation-proof place to park your investment funds.
10. Additional income
If you already have a house or you are planning to shift locations, a home will provide you rentals.
Check out another interesting article on What to Look when Buying a House?