The past few years have been witness to the trend or practice of a rising number of millennials opting to start taking control of their financial life early on in their 20s. By doing so, millennials are also able to break away from the old age narrative of gaining hold of finances only after 35-40 years of age, thus being able to realize even the big-ticket crucial financial life goals like owning a house in their late 20s or early 30s itself instead of late 30s or early 40s. A rising number of young learners in their early 20s to mid-30s have increasingly begun prioritizing the life goal of owning a home instead of renting and shifting every now and then. 

Hence, for those who are in the age bracket of roughly 25-30 years, let us deep dive a bit and understand the benefits of owning a house with the help of a home loan from a top lender like Kotak Home Loan, which has even been offering probably the lowest Kotak home loan interest rate currently:

Availability of longer duration to witness a capital appreciation of property's value

One of the vital benefits of being a young home buyer and Kotak home loan borrower is the larger scope to witness capital appreciation in the value of property over the years. The earlier one buys a home, the longer time the house has to raise its value. Although the expected appreciation in value would ultimately depend on multiple factors like inflation, geographical location, market demand and supply, infrastructure, etc., this availability of a long period of time of around 20-30 years is what raises the chances of likely witnessing value appreciation of property. 

Higher overall home loan eligibility

Those in their 20s or early 30s usually have relatively lower financial obligations vis-a-vis those in the late 30s or early 40s due to a higher number of dependents and responsibilities in the case of the latter. As lenders tend to factor in the borrower' EMI to income ratio as one of the most vital parameters during the assessment of their repayment capacity, having a lower ratio certainly increases one's Kotak Mahindra bank home loan eligibility as well as approval chances. EMI to income ratio, simply put,  is the proportion of your monthly income currently being utilized to repay loan EMIs. A higher ratio is indicative of an imbalance between your inflow of monthly income and outflow in the form of EMIs, thereby implying higher chances of committing default in future whenever any form of adverse life event, financial emergency or sudden big additional expense comes up unannounced. Higher EMI to income ratio can also result in charging a slightly higher Kotak home loan interest rate due to the involvement of higher credit risk in such cases.

Also, the farther you are from your retirement years, the higher number of active work life years you possess to conveniently repay the Kotak home loan with existing or expected income. This is why lenders are usually hesitant towards lending a home loan to those nearing retirement, given that these borrowers tend to have a lesser number of working years left and thus, chances of life’s uncertainties cropping up tend to become higher.

Take advantage of a step-up home loan facility.

In recent years, the prime reason for lenders to continuously attract new and young borrowers towards availing a Kotak Mahindra bank home loan to realize their dream of owning a house has been the focus on devising new products and strategies. Amongst the various new offerings of a customized range of Kotak home loan products, a repayment facility has been specially devised for young applicants, named 'step up EMIs '. Under this facility, the home loan EMI's repayment is linked to the expected growth in millennial borrowers' future income. In accordance with the income rise, a gradual expected increase in the EMI amount after the initial few years is begun to be done, which is proportional to the assumed/expected rise in borrower's income in near future years during the tenure of home loan. Lenders usually structure this facility of home loan repayment in such a way that the rate of income growth is assumed at a preset rate, for instance at 4%-8% p.a, and thus, accordingly, the EMI would get increased proportionately, at particular tenure intervals such as, in every 3-5 years for a loan of 15-20 years.

No doubt, the scope of income growth is certainly brighter for millennials in their 20s or 30s when compared to those in their 40s. Hence, this Kotak Mahindra bank home loan repayment facility works very well for this target group of young earners. Through this facility, they can take advantage of the dual benefits-owning a house at a young age coupled with payment of lower EMIs in the initial years of the loan repayment tenure. However, remember that, when choosing this EMI facility, if the income doesn't increase as per expectations, the repayment may become difficult with the increase in EMI amount at gradual intervals. Also, the Kotak home loan interest rate might be slightly high in the case of such non-standard and specialized repayment facilities.

Availability of longer repayment tenure before retirement

When compared to those in their 40s or 50s, young and earning millennials tend to stand a brighter chance of getting a longer repayment tenure for their Kotak Mahindra bank home loan, with tenures going as high as 30 years. As most salaried individuals retire by the age of 60 to 65, purchasing a home in the 20s or 30s gives you a longer period of time to sufficiently repay the loan obligations, especially home loan EMIs. By owning a house at a young age, you are also likely to complete the repayment during work-life years and not stretch it till or beyond retirement. Moreover, the availability of longer loan tenure and low Kotak home loan interest rate ensures that your loan obligation gets distributed over a longer period of time, implying lower EMIs outgo too. 

Therefore, contrary to opting for a shorter loan tenure with higher EMIs, going for a longer repayment tenure with lower EMIs would result in allowing the homebuyer to make enough breathing room for other vital financial commitments to achieve those life goals. Hence, it is always prudent to choose a longer repayment tenure, even if you are adequately financially capable enough to repay higher EMIs through a small tenure for the Kotak home loan. After taking long tenure to get small EMIs, you can always lower the total interest cost by making part prepayments or even foreclose the home loan later on, upon accumulation of surplus funds to lower the overall Kotak home loan interest rate.