Helping GenZ find their place

A few decades back, the only time a fresh out of college fledgling would consider buying their own house was when they contemplated marrying and even then within a joint family system they saw buying property as investment.

Over time, with escalating rents and increased self independence, the robust Gen Z is showing an inclination to own homes by the time they turn 27. The Homebuyer Insight Report shows a majority of prospective home buyers between 18 and 23 who want to buy a house in the next 5 years (this is in the developed countries). About 52% of the above numbers have already started saving for their own property.

But what about the developing nations?

The story in developing nations is completely different. With a majority of individuals going through lengthier schooling periods, and taking more time to find their way through their careers and eventual independence, the average Indian Gen Z has all the aspirations of the Gen Z, but also has all the legacies to manage.

I say aspiration because the typical Gen Z in India first rushes headlong into a job to ensure financial independence. Over time as the bare necessities are funded, then the Gen Z aspires to travel … the generation is also called as backpackers because of the affinity of unstructured experiences which are valued by this generation. For example instead of a Kesari tour (meh!), this person would want to backpack their way on a beaten down path.

So when do Gen Z finally settle?

The research done points to a couple of reasons.

When starting a Family

Starting a family is the largest motivator for settling down and buying a home. Even if that means taking a loan or financial aid for buying the home.

One of the major challenges that Indian Gen Zs face is that the down payment required for real estate is so high that it’s difficult to buy this house early. What that means, that an entire generation starts becoming more career focused so that they can finally afford their homes.

To solve this problem, HomeCapital has launched India’s First Home Down Payment Assistance Program. Wait … what?

Yes, it is a mouthful, but it’s worth it. What this program addresses, is the challenge that most first time home buyers in India face. The down payment.

Started by a team of professionals from varied fields, the program will provide up to half of your down payment requirements. The program lets you to double your down payment capability and widens your reach in terms of home affordability. It increases your home loan eligibility and makes your home buying faster and simpler.

The cool part

The best part is that this program is engineered in such a manner that the user is not charged interest for the unsecured personal loan that the user gets on this form of assistance. That’s as good as a 0% interest for the user!

Yes, you got that right. If you want a home and you are buying a home on any of HomeCapital’s listed properties, then the HomeCapital team will help you with an unsecured personal loan to pay the down payment, the stamp duty and the registration fees. At zero interest.

So, if you haven’t been thinking of buying a home because of the insanely high prices, now think again.

Equity Release: Debt Instrument

Just when you think, what will these crazy bankers think of next … and boom comes the latest financial instrument ready to stupefy you … with its sheer ingenuity and innovativeness.

This latest debt instrument I came to know recently from a friend in UK is the equity release. Lets take a case of a country home in the UK which has a bit of mortgage attached and the owner wishes to make some new purchases. The first condition of this instrument is that the owner has to be above 55 years of age and the value of the house needs to be higher than the mortgage value. This difference is called the Equity of the house … now private financial institutions will provide these house owners with a method to slowly sell their house for a part payment on that equity value.

What’s so great about this opportunity is that the house owners are not on the streets trying to sell the house directly. Take for example, this equity release from Age Partnership, the ownership will be transferred only after a long long time … until when the house owner has access to a ready pool of funds. With the minimum age requirement of 55, and the average age in UK rising to 78, this means that the house owner has typically a good 20-25 years access to this pool of funds, which otherwise would only be made accessible post the sale of the house.

Thus, finances which would have opened up very later … and mostly by the inheritors, are now suddenly available to the house owner itself. This is great news for elder citizens who are having a hard time trying to maintain a lifestyle. This instrument clearly benefits both the institution and the individuals … a win-win instrument. I wonder, does this idea seem as good as those CDO’s back in 2008.

PS – The problem of all such financial instruments is the same – lack of regulation. With this, we can be sure to see the same … without any overseeing authority to stop malpractice, rogue institutions will realize the loopholes in the system (or lack of one), and exploit this. Any system without regulation is bound to the same problems. So the CDO statement back there really is not fair, but it’s always a risk to consider!