23-07-2025
Explained: Why buying flats on hefty EMIs may not be wise
For many Indians, buying a flat is more than just a transaction. It's an emotional milestone that symbolizes security, success, and ownership. But financial experts are now cautioning that this age-old aspiration may not always make sound financial sense, especially when the math tells a different Kodawar, Partner and President at Complete Circle Capital, recently sparked a conversation on LinkedIn by calling out what he termed 'the biggest personal finance mistake' Indians often make: purchasing a flat on EMIs at 8 to 9 percent interest, only to rent it out at a 3-4% maintenance and other charges, the real return may drop to just 2-3%,' Kodawar wrote. 'This is the real estate investment trap. Please don't fall into it. The real estate game is largely discovered and not that lucrative anymore.'
His warning has resonated with a growing set of urban investors who are beginning to question the wisdom of real estate as an income-generating fact, data from Anarock Property Consultants shows that average rental yields in metro cities like Mumbai, Delhi, and Bengaluru remain stuck between 2 and 3 percent, far lower than prevailing home loan interest traditional belief that 'property never fails' is gradually losing ground to the rise of more efficient and liquid financial funds, equities, bonds, and annuity products are increasingly being seen as superior alternatives, delivering better post-tax returns with fewer hidden estate, by contrast, comes with its own baggage: illiquidity, legal complexities, prolonged holding periods, and mounting upkeep costs. Financial assets, on the other hand, can be aligned with one's risk profile, offer greater diversification, and are typically easier to shift is already visible in the data. According to SEBI, monthly Systematic Investment Plan (SIP) contributions crossed Rs 20,000 crore in early 2025, a strong sign of growing retail participation in market-linked investors, in particular, are exploring SIPs, Exchange Traded Funds (ETFs), and even annuity plans as practical, hands-off wealth is it time to rethink the ownership obsession?Despite the emotional weight attached to homeownership, financial advisors argue it's time to separate sentiment from interest costs are high, rental yields are stagnant, and property prices offer limited upside, the dream of owning a home can quietly morph into a long-term financial puts it bluntly: 'It's time we separate emotional fulfilment from financial sense.'(Disclaimer: This article is for general informational purposes only and does not constitute financial advice. Readers are encouraged to consult a certified financial advisor before making any investment or financial decisions. The views expressed are independent and do not reflect the official position of the India Today Group.)- Ends
