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Prepay Loan or real estate investment

Last updated: November 26 2018
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  • Prepay Loan or real estate investment

    Hi,

    I own a 1 bhk in punawale with no loan. I have purchased a 2 bhk in Wakad with 55 Lacs loan nearing possesion. My question is -

    1. Should I sell 1 BHK and prepay major part of loan for 2 bhk

    2. Keep both properties and continue paying interest of 55 Lacs loan

    What is more profitable say 10-12 years from now?

    as per me, advantages of selling 1 BHK is less EMI burden for new home now, current real estate stganation and peace of mind loooking at IT job scenario and increasing child education costs. Whereas advantge of keeping 1 BHK is in long term, say 15 years, with land running out in Pune limits, But it is speculation.

    Please do not advice with words like "depends"


  • #2

    #2

    Re : Prepay Loan or real estate investment

    Originally posted by realestuser View Post
    Hi,

    I own a 1 bhk in punawale with no loan. I have purchased a 2 bhk in Wakad with 55 Lacs loan nearing possesion. My question is -

    1. Should I sell 1 BHK and prepay major part of loan for 2 bhk

    2. Keep both properties and continue paying interest of 55 Lacs loan

    What is more profitable say 10-12 years from now?

    as per me, advantages of selling 1 BHK is less EMI burden for new home now, current real estate stganation and peace of mind loooking at IT job scenario and increasing child education costs. Whereas advantge of keeping 1 BHK is in long term, say 15 years, with land running out in Pune limits, But it is speculation.

    Please do not advice with words like "depends"

    you must be paying around 9% annually on home loan. imo value of a 1bhk in punawale is not going to appreciate better than that rate anytime soon. of course no one can anything about what it would be like 15 years later.

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    • #3

      #3

      Re : Prepay Loan or real estate investment

      Hi real,

      If you've >50% of net-worth in real-estate then better diversify in other asset-classes like mutual-funds, PF, NPS, Govt bonds etc some also generate alternate-income.

      City land running-out is a myth sold to buyers. Even in south/central mumbai, I see lots of old 3-4 storey buildings waiting for redevelopment besides chawls/slums. These will be redeveloped into 12-25 storey buildings, making more apartments available. The same applies to old-Pune city.

      Other negatives are rising cost of owning-property and rapidly decling population-growth.











      Last edited November 26 2018, 04:47 PM.

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