Owning a house is on the wish list of several people. This wish can become a dream if one wants to own a lavish house that is beyond their budget. At first, it needs lots of money cum financial planning, secondly, you need to stretch your finances to fulfil it.
But do you think postponing the purchase till you accumulate the required funds is a good idea? Well, it can also be a costly proposition and can be frustrating too. On the other hand, until you purchase your own house you need to live in a rented house, this means you need to spend on the rent which could have been added to EMIs.
So, what does one do? Should one wait until they accumulate that much money and live in a rented house? Or should one go for their dream home/forever home by extending their finances? Well, there is a middle option that lies in between purchasing your dream home and renting. This is buying an affordable housing known as a starter home. You must be thinking about what it is?
What is a Starter Home?
As the name suggests, a starter home is an affordable home mostly bought as a first home. It is generally a smaller home that doesn’t have all the amenities you might want in your dream home.
Basically, with a starter home, you compromise with some of your wants regarding your home, it may be the location, carpet area, interior, etc.
But the benefit of buying a starter home are many such as,
- They are less expensive.
- You can buy them without waiting for years to save up for a down payment.
- Buying a starter home can give you the chance to save money and build equity in a property at the same time.
- What you would have spent on rent can be utilized on paying EMIs for your starter home. The benefit of this is while paying rent you just get a place to live, whereas when investing in EMIs you get the place to live and ownership of a house at the same time.
Forever Home/Dream Home
A forever home is basically a home that you have always dreamed of. It is the one that you can imagine living in for a very long time or for the rest of your life. A forever home has almost everything that you want in a home from a big balcony to a kitchen with utility area, bedrooms with well interior wardrobes, a backyard, perfect by location and carpet area as per your requirement. The big convenience with these homes is – you don’t need to shift your house with changing time but these houses are much more expensive than the starter homes.
When to go for a Forever Home
When you know you can settle down in a particular area for a long time.
If you’re stable in your career
You are financially capable enough
If you’re thinking to start your family
Investing in a forever home can be a more comfortable and financially sound option only in the above-mentioned situations.
Pros of Buying a Starter Home
- It gives you stability and a good enough feeling for now.
- It’s a good investment that has the potential to get good returns in the near future.
- Your money gets utilized at the right place as you get the ownership of a house in return.
- You can avail tax benefits (deductions) under various income tax acts applicable for principal and interest repayment) when availing a home loan.
- You can avail of the benefits under the PMAY scheme where you get a subsidy up to 2.5 lakhs on your home loan.
- Starter homes are affordable hence arranging money for its down payment is not a big deal for many, and as the loan amount is less it can be repaid easily in comparatively less time.
Jumping into homeownership is not a small thing, it’s a big decision and can affect your finances for years. Buying a starter home whereas makes lots of sense as it eases your way by purchasing a house that you can afford at that particular phase of life. Buying a starter home also saves your money which you would have paid on rent and gives you financial stability as well. Meanwhile while staying in a starter home you extend your earning and can plan your finances to buy your forever home.