Why Buying a House Early Could Harm Your Finances – What Young Professionals Should Know 

More young professionals buy a house during their young professional career compared to a decade ago, when their age bracket would have ranged between 40-45 years. Young adults are mostly looking to achieve self-reliance and to "settle down"; they therefore wish to make more of a serious commitment over their choice to buy a home earlier in life, compared with what was prevalent before. But experts claim that purchasing a home very early can be very stressful to one's pocket, particularly if the buyer is not saving enough or just getting a stable career.

Is There a "Right Time" to Buy a Home?
While there is no specific "right time" for buying a house, experts recommend waiting until you save at least 40-50% of the price of the property. This way, the monthly EMIs do not become unmanageable. For most people, this level of financial stability is achieved in the mid-career stage, which normally falls around 35-40 years of age. At this point, buyers might have a more concrete idea of their career path, a stable location, and even a dual income if they have a partner. This pooled income can make sure that the EMIs do not exceed 25% of household earnings, which is recommended for good financial health.

Heavy EMIs and Financial Pressure
A huge loan is involved when one buys a house early because the prices of properties in prime cities are too high. A small apartment in a prime area costs more than ₹50 lakh. With a traditional bank loan paying for 80-90% of this amount, the EMI can even gobble up more than 60% of income if availed in the early days of one's career. Experts in the financial sphere say that payments towards loan should not be more than 30-40% of income. High EMI may keep the new professional with minimal flexibility towards other financial objectives, in case he/she has other loans as well.

Renting Over Buying: A Wise Substitute
The same thing can be said in another way. Renting permits flexibility and tremendous savings in place of overstretching finances with very high EMIs. Thus, a far greater percentage of the young professional's income gets saved through renting a home for an amount around ₹25,000 a month. Even this savings, if invested at a 10% annual return, would snowball into a great base to make a home buying much easier later on in life. Renting provides a benefit of flexibility and also the possibility of moving when better job opportunities come along.

There are also non-monetary reasons to delay home ownership, based on practical grounds such as the following:

Job Mobility: People at an early stage in their careers change or transfer jobs and relocate and can be less easily fixed to a place and, hence, property.
Increased Family Needs: Changes in family circumstances may demand that more space is required for them in the future.
Career breaks: Some want to take sabbaticals or continue higher studies; such expenses could get burdensome if one incurs monthly EMIs.
When one buys a house, he or she must, without doubt, feel like he or she has really "crossed the milestone." Experts, though do recommend people to save enough at the very onset of a career by keeping himself or herself busy to have rented out a house for oneself. This would lead them into higher financial flexibility. Accordingly, they would find myriad opportunities to acquire an ideal dream house later on.

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