What is the right time to buy a home for a government employee?
TownSIP Research ~ 15 min read
There is no right time to buy a home, it all depends on your personal choice but technically, it is between 28–40 years of age, if you are in a government job. Let me explain to you how.
We need to look at the following things before arriving at the right age.
- Loan Tenure: Most of the banks offer loans for 30 years maximum and considering your retirement age is 55–60, it points out to 25–30 years of age as an appropriate time period. Also, as the age passes, chances of getting a loan become a little difficult and one end up paying a higher EMI.
- Down Payment: Most of the young people do not have cash for a down payment to buy a home and that is where most of them drop out of their plan. However, they can still pursue their dream by utilizing some of the lesser-known available benefits. E.g. Do you know that you can afford a home of 1Cr today if you are a Major in Army. Most of us drop the idea because we feel that we need 20 lacs to pay as a down payment. Whereas with parallel funding, subvention and some other schemes, one can still own a home with merely 5 lacs as a down payment.
- Maximum Utilization of tax Benefit: Once one crosses a taxable income of 5 L, he/she is bound to pay tax. Most of the Gazetted officers start at the salary of more than 8–9 L per annum. If one does an investment in the home at an early age, around 70 lacs of taxable income can be saved. In the case of both the partners working, this amount doubles, i.e 1.4 Cr. For 20 years of a home loan at salaried income, total taxable income gets lower by one crore at least. (For more details regarding tax benefits read here: https://bit.ly/31RYg3B)
- Safest investment with a return more than inflation: Done at the right place and in the right environment, a house yields a great return more than any other investment. Investment in Earth and Gold are the safest investments ever.
- Other major expenses: Kids education, marriages and any medical liabilities due to poor conditions of govt hospital are some of the major expenses that cannot be ignored at later age, hence an early exit from liability of home loan is a right decision.
Hence a home loan taken when you are young in service can bring you benefits of both the investment and taxation world.
About Writer: Ravi Kumar is one of the founders of a real estate startup called Townsip.com. A graduate from Army Institute of Technology and Stanford GSB. This idea came to him when he saw his parents and friends struggle to find a home of their choice with the likeminded neighbourhood to settle down. In addition to this, a lot of other logistics challenges of legal, loans, site visits etc. are not easy to coordinate when you are dealing as an individual. This even becomes more challenging due to the place of posting being away from hometown. Keeping this in mind, they decided to start creating communities for government employees and start offering community living, to people from the same background who are looking for people with similar lifestyles and interests at affordable prices. Such community living brings together people with similar backgrounds enabling them to create their own ecosystem thus avoiding adjustment challenges that come with new neighbours.