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Tata Capital > Blog > Loan for Home > Buying a House as an Investment for Future

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Buying a House as an Investment for Future

Buying a House as an Investment for Future

Usually, the first house that people buy is for self-occupation or personal use. And that is understandable as property is one of the 3 basic needs.

But increasingly and as it has become a trend in last few years, many people are considering buying a house for its investment-worthiness. Major reason for this is that property did indeed was giving good returns in last decade or so. You could find several stories of people multiplying their wealth several times by smartly investing in real estate.

Additional Read - Find Out The Best Realtors in India to Help You Get Your Dream Home

But will this trend continue forever?

The obvious answer is no. As has been seen in real estate induced credit crisis in US markets too. Even in India, last couple of years has seen property prices not growing at all. So, yes property has the potential to give good returns in future, but the actual returns will differ from case-to-case.

Infact, there are numerous researches that prove that one big reason for run-up in property prices in last decade or so is the ease of funding the transactions. One doesn’t need to save for several years to buy a house. Instead, one can buy a property at a very young age by going for home loans. And since home loan interest rates are not very high, the burden of EMI in later years (once income increases) is not much.

Additional Read - Tips and Tricks on How to Reduce Home Loan EMI

If you are planning to invest in property, that too by taking a loan, then you need to be careful. Taking a home loan means that the actual cost of property will increase when you include the interest cost of the loan. So your returns will have to be calculated accordingly. But if you have done your homework and found a house that is not very costly (and you are making a higher downpayment) and is also located in a growing area (where new infrastructure is coming up), then you can expect to get decent returns.