The Golden Window

In my years of real estate work, one of the frequent questions that property buyers ask me is:

When is the best time in my life for me to buy a property?

One way to know the answer to this question is to understand your ability to buy a property. Are you able to pay for the down payment, get a loan from the bank and pay the monthly instalment?

If we were to look at a typical working person’s life, we can see a dilemma. When we are younger, being a fresh graduate from school and starting out to work, we may not have enough money to buy a property. This is because our income may not be good enough to obtain a decent amount of loan from the bank. Plus, our savings may not be enough to pay for the down payment too.

As we age, our income and savings should increase. This will put us in a better position to buy a property. However, as our age increases, our bank loan tenure will decrease. The decreasing loan tenure may decrease the loan amount we can get for our property purchase. Here we see a tug of war between our income vs loan tenure (our age). So, is there a window period in our life that is most suitable for us to buy a property?


Let us explore this using a simple example here

Assuming I am a fresh graduate with a starting pay of $3,800 a month. Assuming my spouse also have the same income and is of the same age as me. Assuming we have steady salary increase of 3.5% every year. Using these assumptions, we can estimate the property loan and the corresponding instalments payment based on the information (See the table below).

*Loan tenure till age 65 or 30 years whichever is shorter


Looking at the table above, there are a few important observations:

  1. As the income of the couple increases over the years, the property loan they are eligible for has also increased. However, the increase has peaked at the age of 40 to 45 years old. After age 45, we observed that the loan amount will drop exponentially as the couple age.
    • The main reason the loan has increased is due to the increasing income over the years
    • Beyond age 45, the loan amount starts to drop due to the shorter loan tenure.

You can see this trend clearly in the Age vs Loan graph below.

Graph of Age vs Loan

  1. Looking at the instalment column, we can see that for the same amount of $1M loan, the instalment amount will increase exponentially from age 50 onwards. This is also due to the shorter loan tenure. You can see it clearly in the Instalment vs Loan graph below.

Instalment vs Loan

The calculations above seem to suggest that the golden window period to buy a property is age 40 to age 45. This is the period whereby I can get the maximum loan and the corresponding instalment is not too high too. In addition, at age 40 to 45, I should have worked at least 15-20 years and have a decent amount of savings in my bank account or CPF account which I can use it towards the property down payment.


5 other things to consider

  1. Even though from age 40 to age 45 seems to be the golden window period to buy a property, it is still good to buy early to have a longer investment time horizon. What if at age 40-45 there is a property price bubble, or the property price is at a peak? Market goes in cycles, with longer time horizon, you will be able to see more market cycles and have more exit opportunities. Even if you missed out the first cycle to cash out your property, you can still wait out for the next cycle.
  1. We can never turn back time. Once we have missed the golden window period, we will have to accept a higher instalment or lower amount of loan. Thus, if you are intending to use property as part of your wealth accumulation plan, do plan early.
  1. What if you are in your golden window period and there is a property price bubble at the same time? Do consider if the market is at a bubble now? If it is, you can consider holding on a while.
  1. You should never over leverage your finances just to buy a property, even if you are already in your golden window period. Do exercise care and caution. It is extremely critical do a proper planning before making the next property investment decision.
  1. Always match your property buying decision to your current life goals. You can buy does not means you must buy. For example, if your objective is having enough funds for retirement, there is no point taking on additional risk by buying another property if you have already accumulated enough for your retirement.

The golden window concept explored in the article here is for us to understand the golden period for us to get a property. Beyond this golden period, the challenge of getting the property will be a big challenge due to the lower loan amount we can get from the bank and the corresponding higher instalment payment. Time is of the essence, and it is good to plan early. I have personally met people who intend to purchase a property, but as they have past their golden window period, getting a property for them is almost impossible.

On the other hand, you should always match your life objectives to any property purchase as elaborated in point 5. above. If you have further questions on your golden window and how it can affect you, just fill in the form below.

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