Taking loans is a necessary part for an individual to buy their own house. As the prices of the property have gone sky-rocketing it becomes very difficult for an individual to buy their own house without taking loans. These days home loans are available at attractive interest rates to the borrowers. The interest rates are declining steadily due to a fall in the repo rate of RBI. The banks also provide festive season offers of lower interest rates to increase their disbursement ratio of loans and gain more new customers. The loans if bought at an early age can be availed at lower interest rates to the borrowers. Proper financial planning along with the high salary is a necessary part for an individual to buy their own house. The borrower should maintain a sufficient amount of bank balance in their bank accounts to be on a safer side during the borrowing of loans. Banks provide loans for a maximum tenure of 30 years depending on the age of the borrower. The minimum age for availing of home loans is 21 years while the maximum age for self-employed is 65 years while for the salaried people it is either 60 years or retirement age whichever is early.
The interest rates are charged at a competitively as there is huge competition amongst the lenders for the disbursement of loans. The competition amongst the lenders is fiercely competitive as there are lot many players amongst the public sector banks, private banks, co-operative banks, and the NBFC’s for the disbursement of loans. Thus the borrower has a wide range of options amongst the lenders to choose from. The income tax department provides tax rebates to the borrowers under section 80C on the principal amount and under section 24 for the interest repayment of the loans. The exemption on an annual basis can be availed of Rs.1.5 lakh on the principal amount and Rs.2 lakh for the interest repayment of the loans. Also, the banks provide two different types of repayment options to the borrowers. The one is fixed interest rates and the other is flexible interest rates on the loans being disbursed. The fixed interest rates are the ones wherein the interest rate gets fixed after the closure of loans. While the floating interest rates are the ones wherein the interest rates keep on varying depending upon the market conditions.
Benefits of availing of loans at an early age:
- Longer tenure:
The maximum tenure provided by the bank is 30 years. For availing of loans for 30 years the maximum age of the borrower should not be more than 30 years. However even in a later stage if the loans are availed it is not considered at late to avail loans. Only the tenure for which loans be availed can be a bit shorter span. The ideal age for availing of loans is in the age group of 25 years – 45 years. Even 15 years after the age of 45 years is sufficient for the repayment of loans. Also over years, the savings with an individual goes on increasing which benefits an individual to avail lower amount of loans and higher down-payments.
- Lower monthly installments being applicable:
The loans can be repaid with lower installments as the available span for repayment is high. Thus the monthly installment charged by the lenders is low. Lower monthly installments can make it easy for the borrower to repay the loans every month.
- Lower interest rates charged:
The interest rates being charged by the lenders is also lower in the case of young age applicants. Thus the borrowers can avail loans at lower interest rates from the lenders.
- Higher prospects for growth in income help in faster repayment:
The prospects of growth in the career are high for the young borrowers. While as for the people of higher age groups above 50+ years have their careers reached the saturation points. Thus for the young borrowers if their income grows rapidly can help the borrower repay the loans faster. Thus the young age customers are amongst the most preferred customers of the banks.
- Chances of security in taking loans are more on either side:
As the young borrowers have a higher span of years available for the working even in case of the ups & downs faced in the career cannot lead to the end of the career, as the demand for the youngsters in the organizations is high and thus can easily manage to get new jobs in case of job losses. Thus even the borrowers most of the time are safe in case of availing loans and also the lenders are safe while disbursing the loans to the young borrowers.
Thus there are various benefits for the borrowers to avail loans at an early age. Proper financial planning is the major factor being necessary for availing of loans at a young age. Also, the young borrowers are the preferred customers for the banks as the young borrowers are amongst the long-term customers of the bank. Banks prefer having a long-term relationship with the customers to provide various financial products to their customers and gain maximum business from the customers.