Property Investing in your 40s If you've blown out 40 candles in the not-too-distant past, then here's the good news: you are not old. Far from it! With a good 20 years remaining as an income-producing citizen, you have plenty of time ahead of you to make some profitable investment decisions.
There's still plenty of opportunity for 50-year-old-plus investors to make significant return on property. You just need to adjust your thinking and focus on a new strategy that suits your age, stage and plans. There are several advantages to being a 50+ investor.
The older generation: Gen X and property
Generation X (born between mid-1960 and early 1980s) are at the prime time for investing in property – according to the statistics, it's this cohort that owns the most investment properties! The earlier you invest, the better.
Thanks to the Equal Credit Opportunity Act, there is no age limit to taking out a mortgage. As long as you can meet the financial requirements, you're allowed to take out a loan at any time. To take out a mortgage over 60 you will need to be able to prove your ability to repay the loan.
A global study done in 2020 showed that the average age of first-home buyers in Australia is 36.
The Bottom Line
If you're in your 50s, it's not too late to buy a new home, but it's key to ask the right questions and make the wisest decisions possible. Above all, make sure you won't be stuck making mortgage payments years after retirement. Gallup. "Most U.S. Employed Adults Plan to Work Past Retirement Age."
But in your 40s, the reminder to save and invest for the future — your future — should be front and center on your fridge, or wherever you keep your “to do” list. It's never too late to get started, and the good news for investors in their 40s is that you're heading into your peak earning years.
There's no age that's considered too old to buy a house. However, there are different considerations to make when buying a house near or in retirement.
Plenty of research has found that millennials are delaying homeownership because of their student loan debt. The millennial homeownership rate lags behind rates for both baby boomers and Gen X when they were in the same age range.
According to a 2021 report from the National Association of Realtors, the typical first-time home buyer was 33 years old.
Average length of homeownership in the U.S.
The most recent average duration of homeownership was eight years while the median was 13.2 years in 2021 — an increase of about three years over the last decade.
Getting a mortgage when you're over 40 isn't impossible by any means, but you may need to answer more questions than a younger person. The older you get, the harder it may be to access standard mortgage products.
How much mortgage debt do 40-somethings have? The average mortgage balance among people in their 40s is $348,109, according to Personal Capital. To be clear, that doesn't mean people who first take out a mortgage in their 40s are signing up for a $348,109 loan.
Your 40s are your peak earning years, making them the perfect time to begin building wealth. As a rule of thumb, a 40-something should have at least 2 times their annual gross income in savings and investments.
To stay on track to retire at 67, you should have saved 3 times your income by age 40, according to retirement-plan provider Fidelity Investments.
When you hit your 40s, you may be on more solid financial footing than you were in your 20s. But that doesn't mean you should buy the priciest home on the block—even if you can afford it. Instead, consider the expenses and financial obligations that will come up through your 40s and into your 50s.
There's no age that's considered too old to buy a house. However, there are different considerations to make when buying a house near or in retirement.
If you absolutely have to choose, however, go for the retirement savings. It's better to be financially comfortable in retirement, when you have limited opportunities to grow your wealth, than it is to be a homeowner.
Usually, 20% of the full value of the house is a good amount to aim for as a deposit. You can still get a loan if you have a smaller deposit, but you may need to take out Lenders Mortgage Insurance (LMI) which adds an additional cost to your loan. It'll also take longer to pay off.
Trends in home ownership. Home ownership data from the 2021 Census show a home ownership rate of 67%, down from 70% in 2006.
Though it is illegal to discriminate based on age, it is true that many lenders will be less willing to lend to people who are very young or very old. This might mean that they will take a closer look at the application of people who are very young or very old, to make sure the loan is a solid bet.