Kishor Pate
In India, the current mantra is that property investment is ideal only for, upcoming or established career makers - but is this true? How do banks, lenders and the property sector at large view investors who do not fall in that age bracket anymore? Can one be too old to put money into property, and would one have missed the chance to grow their wealth through real estate at some point?
Of course, it is true that banks are willing to lend to a person only for so long; when a prospective borrower is looking at retirement in the near future, the concept of giving them a long-term home loan understandably does not make much sense to them. Let us examine this a little more closely.
When a person is in his or her 30s, they have around 30 years of active professional life ahead of them. Naturally, this gives them abundant time to develop a large property portfolio. However, even when they are in their 40s, they are far from too old to successfully invest in property. There are still as much as 20 years ahead as an income- generating citizen - and even more if one is successfully self-employed or runs a business.
In other words, there is still plenty of time ahead to make some profitable property investment choices even in one's 40s. Of course, it goes without saying that the sooner one invests, the higher will be the ultimate gains because profits from property compound over time.
Generally, it is assumed that one must have the ability to service home loans for 25-30 years to finance one's property portfolio. However, many banks in India have now understood that people can and do work past the conventional ‘retirement age’ of 65 these days.
Interestingly, once one has secured a good portfolio of assets, one has additional clout and credibility with banks since these properties can act as collateral for fresh loans even at age 50 or above. Definitely, the time to experiment with 'speculative' investment should be over by this time, as one should justifiably have a healthy aversion to risk by age 55.
By this age, the ideal strategy should be to boost the value of one's existing assets via proven value-boosting routes such as renovations. Without a doubt, a person who wants to keep investing in property in India at age 60 or above needs to have a very clear understanding of the market, as well as a great deal of confidence in one's personal finances.
As already explained, it is now technically possible - under certain circumstances - to raise a home loan for property investment even after retirement. The question whether one would want to is, of course, a personal one and would depend on a variety of circumstances - most related to one's financial soundness and appetite for such activities.
So far, so good for investors - but what about those looking to buy a home for personal use? This is where it gets a lot simpler because there is no 'ideal' age for home ownership. If one has been living in rented homes all one's life, buying a home even at 65 makes perfect sense. In the first place, it is the perfect retirement gambit, as it provides freedom from the recurring expense of monthly rent. Secondly, it secures a sound asset which gives unmatched financial security and can be used to raise funds in emergencies. Thirdly, a property is the perfect bequest to leave behind for one's children.
The bottom line is that there is definitely such a thing as an 'ideal age bracket' for property investment - though this age bracket is flexible depending on various factors. However, there is no 'ideal age' to buy a home for personal use. The latter fact is especially true if one sees a self-owned home more as an abode and sanctuary of financial freedom and security than an investment instrument.
The writer is CMD of Amit Enterprises Housing
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