Reasons for taking a home loan before turning 30 vary significantly based on individual circumstances. Some salaried employees may take on a home loan in their 20s if they can save for a down payment and feel financially stable enough to manage the mortgage payments.
Factors influencing this decision include:
Financial readiness: Whether someone has saved enough for a down payment, has a stable income, and can manage mortgage payments comfortably.
Career stability: Some individuals prefer waiting until they’re more settled in their careers before taking on a significant financial commitment like a home loan.
Personal goals: Some might prioritise other financial goals or experiences before committing to homeownership, such as travel or further education.
Local real estate market: The cost of real estate can significantly impact when someone decides to take out a home loan. In areas where property prices are more affordable, individuals might consider homeownership at a younger age.
Rahul Mehrotra, MD & CEO, RHDFCL: “We have been witnessing a gradual increase in the younger population, below 30 years, applying for loans on a Y-o-Y basis. We expect a growth of approximately 50% – 60% in FY 2024. As per market estimates, the average age for Indian consumers to take their first credit card is 28 years, while the average age for the first personal loan and the consumer durable loan is 29 years. There has been a rise in awareness and interest regarding financial markets among the youth, which has resulted in maintaining a good credit history. Moreover, 40–45 per cent of first-time home loan borrowers have been found to be between the age group of 30 years and 40 years.”
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Kamaljeet Rastogi, Chief Executive Officer, Manipal Business Solutions: “In the last ten years, there has been a significant transformation, not only in the general purchasing behaviour but also in the age demographics of property buyers. Owning a home is often seen as a significant life goal and a symbol of financial stability. Many individuals prefer to achieve this milestone early to fulfil personal aspirations and provide a stable living environment for their families. The average age of first-time homebuyers in India is around 30, particularly those considering properties priced below Rs 1 crore.”
“Meanwhile, individuals aged mid-40s or above are growing in preference for premium homes, priced at Rs 1 crore and beyond. Various factors, including rising income levels and escalating real estate prices in numerous urban areas, shape this growing trend in India. These dynamics are prompting individuals to make early investments in property, hoping to benefit from the increasing value of properties. The attractive tax benefits associated with home loans, including deductions on both principal repayment and interest payments, add a financial incentive to this choice. Moreover, the desire for ownership and the long-term financial benefits of property ownership motivates younger adults to consider buying a home rather than renting,” added Rastogi.
However, one should understand that there’s no fixed rule about when one should or shouldn’t take out a home loan. It’s a personal decision based on various factors and individual circumstances.