More than One House? Here’s How You should Plan your Home Loan EMI

Buying the home of your dream can be time-consuming with a lot of running around. If you already have a home loan running, then planning to go in for another could be expensive. This will definitely involve a lot of time, patience, and discipline. But there is no restriction on the number of properties you can own. This would depend entirely on your income and your ability to repay the loan.

Here are a Few Points to Consider before Buying a Second Home:

  1. Buying a second home gives you tax benefits.
  2. Even if you are in a financial position to purchase a home using your own funds, a home loan has advantages over self-financing. You can invest your funds and earn interest to repay your house loan.
  3. Try to purchase a home in your present locality. It makes sense if the locality is convenient with shopping malls, schools, transportation, etc.
  4. Aim to buy a property from a reputable builder. Ensure that everything is all right in terms of technology, construction, property documents, and title deeds.
  5. It is also advisable to find out if the builder has a track record of delivering on time.
  6. Study the cost sheet of the entire home purchase including home cost, amenities, registration costs, parking, deposits, etc.
  7. If you buy a completed house, you also enjoy tax benefits from the date of purchase, but this does not apply to houses under construction.

A Few More Points to Consider Before Buying a Second Home:

Affordability

A couple of questions you should be asking yourself before buying a second home are: Can I afford a second home? Do I really need a second home? You can easily answer these questions by yourself. All you need to do is check your income and expenditure. Think carefully before going in for a second home loan. Think about whether you can afford it. This is especially when you already have a house loan outstanding. You can go ahead if you have sufficient income to pay the monthly EMIs. You can use a housing loan EMI calculator to know what your fixed monthly outgo will be for a home loan. Different providers of home loans offer different benefits. Check all available options before you make the plunge. If you have a good credit record and have never defaulted on your existing loan payment, then you can expect a lower housing loan interest rate.

Tax Benefits

Surely you would not want to pay more taxes for a second home. You do not get full tax deduction if you have a second home that is rented out. The income from your rented house has standard deductions for maintenance and municipal bills. Half the income is used to pay the home loan EMIs. You are only left with a meagre amount, for which you can file home loan tax benefits. Keep this point in mind before applying for a second home loan.

Size and Location of the Second Home

If you want a second home for an investment purpose, then the location and size of the property would matter. Choose a location where you can get the most out of the rent. This could help with repaying your home loan EMIs. Also, determine what the maintenance cost could be. Remember that the bigger the house, the more the maintenance.

Down Payment Amount

You should also keep in mind that you have to pay a particular amount as a down payment. Usually, the down payment is 20% of the property sale price.

Are Two Mortgages Affordable?

You should work with a professional to understand the tax implications, as well as the terms and conditions, of the loan. Always save for a rainy day and keep some cash set aside. This will come in handy if you lose your job. The cash set aside can be used to pay your installments.

Conclusion

Buying a second home is a dream for many. Some buy a second home for vacation purposes, while some buy it for investment. A second home has its benefits and advantages as mentioned above. However, it is important to keep the above points in mind before doing so. Non-banking financial company (NBFC) brings you offers for personal loan, home loan, EMI finance on different products, and other financial services. Not only does this simplify the process of availing financing, but also helps you save on time. All you have to do is share a few basic details and check out your offer.

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