Dream Home Vs Starter Home - How to Choose Your First House? - Home Loan Stories | Kotak Mahindra Bank

05 MAY, 2021

While everyone would love to own a lavish house equipped with all the modern amenities, let’s not forget that such a purchase would require a substantially large amount of money. On the other hand, a starter home furnished with basic facilities would be comparatively affordable. Deciding between a dream home and starter home can be tough, and the opinions may vary from one person to another. But, analysing what’s prudent from a financial perspective can help you draw a conclusion.

Let’s learn the difference between a starter home and a dream home, and which one should you choose as your first home.

Starter Homes Vs Dream Homes

Starter Home

A starter home is typically a small and affordable home that can serve the basic needs of a homebuyer.  A starter home may not feature amenities you wish to have, but it can be a good-enough home for the near future. In the real estate industry, the term ‘starter homes’ commonly denotes compact houses with one or two bedrooms that are designed to meet the requirements of young people buying their first house.

Benefits of Buying a Starter Home

  • In case you avail home financing to purchase your starter home, you are likely to be eligible for Credit Linked Subsidy Shame (CLSS) under the PMAY. This will help you get a subsidy on the home loan interest rate, thereby reducing your home loan EMI and repayment burden to some extent. Also, the houses constructed under PMAY scheme will have all the basic facilities such as water supply, electricity, sanitation, and a proper sewage system.
  • It’s possible to purchase a starter home without waiting for years to save for the down payment.
  • You can skip the hassles of living in a rented apartment. Moreover, the amount paid towards rent can be utilized in paying EMIs.
  • Investing in property early in life is always a good option as it has the potential to offer good returns in the future.


Dream Home

A dream home is basically a spacious and well-furnished home that you may have always dreamt of owning. As you grow in your career and become financially more capable, you can consider purchasing the dream house. Buying a dream home or forever home has its own perks, such as you can reside in it for the rest of your life, fix up or modify the house as per your convenience, enjoy extra space, etc.

If you envision yourself staying in the same city or town for many more years, buying a dream home can also be a good option. With this, you wouldn’t have to worry about changing the house after you get married and start a family of your own. A dream home is especially beneficial for those who have made some progress in their career and have a stable roadmap ahead.


Benefits of Buying a Dream Home

  • Shifting takes time and money. A dream home can save you from the hassles of moving from one place to another.
  • You can add amenities to your dream home and renovate it without having to worry about moving to a different house in the future.
  • You will be spared from the challenges that come with shifting to a new place, such as adjusting to the new environment, finding the right school for your kids, etc.

To sum it up, purchasing a starter home wouldn’t be a bad idea for first-time home buyers. On the other hand, if you wish to own a house wherein you can start a family and reside for the rest of your life, it’s advisable to purchase a dream home. Be it a starter home or dream home, you can finance its purchase by availing a home loan with Kotak Mahindra Bank. Do not forget to check your PMAY eligibility while availing a home loan with us. In case you meet the PMAY eligibility criteria, you can get a subsidy on the home loan interest rate. Easy application, simplified documentation, minimal processing charges, and competitive interest rates are some of the major benefits of availing a home loan with Kotak Mahindra Bank.

Moreover, it’s possible to make use of the prepayment facility to prepay the home loan and get rid of your debt sooner. Before applying for a home loan, ensure to check your loan eligibility with the help of an online home loan eligibility calculator. This will boost the approval chances of your home loan application. Lastly, ensure to read and understand the terms and conditions of the loan agreement carefully, whether you go for a dream home or a starter home.

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Disclaimer: This Article is for information purpose only. The views expressed in this Article do not necessarily constitute the views of Kotak Mahindra Bank Ltd. (“Bank”) or its employees. Bank make no warranty of any kind with respect to the completeness or accuracy of the material and articles contained in this Newsletter. The information contained in this Article is sourced from empaneled external experts for the benefit of the customers and it does not constitute legal advice from Kotak. Kotak, its directors, employees and the contributors shall not be responsible or liable for any damage or loss resulting from or arising due to reliance on or use of any information contained herein.