BUYING FIRST HOUSE

As soon as one starts earning and s/he must start saving  and take  care of other prerequisites like term insurance and medical insurance, If this is done with discipline and keeping control over expenditure.If expenditure  is more on needs and less on wants and with regular savings, the kitty can grow well especially since most will be single at this stage with less of responsibilities. Often at this stage due to youth and lack of maturity value of maximizing savings is not realized. Let us assume that this is done correctly then the first consideration needs to be to buy a house taking housing loan. Besides tax benefits earlier one gets a shelter for himself and his family better it will be on the journey to wealth and happiness.

What are the points to be noted at this stage

1. First or one house is not an asset when talking of Personal Finance as you will need to live in it the whole life, yet it is very important for the future , to increase your net worth.

2. This is not likely to be your ideal house or retirement house depending on your financial position.

3. It will make it easy for you to buy a bigger one when family size increases with children or either parents becoming dependents and there is a need for more space in the house.

4. If you continue to do well in your service or business this can become an asset if you can afford to buy a bigger much needed house and start earning rent from this one.

5. Even with newly legislated RERA act I will not recommend going in for a proposed house or under construction one . House construction industry in India will take some more time to be reliable, less risky and credible. Risk is high and not affordable in such cases despite some advantages.

6. Better will be to go in for a second or third sale house, where risk is less and basic infra structural facilities and amenities are in place.

7. If in a transferable job select a place where some one from your close family will be able to look after the house, maintenance and rent receipts etc in case you move out station.  This may be the case for those in cities but can only afford a house in smaller towns to begin with.

8. Select an area where rents are better and there is a demand for rental houses.

9. Buying the first house as early as possible is more advantageous for those in jobs where government or job provides housing.In such cases the house rent will itself pay off the loans / mortgage creating an asset for you.

10. Remember to take insurance for the housing loan which does not cost much but covers the risk and the house goes to your near and dear one without any liability in case of an unfortunate death or serious handicap.