Buying a Second Home, Here’s What You Need to Know
Mar 02, 2017 Home Trading Steps
Buying a house is everyman’s dream. After paying a huge amount of loan for years, there are just some who think of buying a second house. It might actually be a good idea to invest in a second home as it will not only provide tax benefits but also will give better rent in future. Real estate investment can help you beat inflation as well. As the real estate prices are rising every day, owning a second house may seem like a distant dream, but it can be achieved by taking few simple steps in the dedicated direction.
Budget:
It is very important to fix your budget before you think of buying a second home. Some banks and websites provide you approx idea of how much you can afford to invest in your second house. The budget of your second home should be based on that loan amount. Buyer should make sure that investing in a second house does not make a huge dent in their regular expenses and also keep future expenses in mind and still are able to save enough for a rainy day.
Bank Loans:
Banks generally offer up to 80 percent of the loan for the property, the rest 20 percent has to be paid from your own pocket called margin money. The cost of buying a house also includes registration costs, stamp duty etc. Banks generally include these costs in their loan amount, but the buyer should be ready and have enough saving to pay for the margin money. After banks have conducted a due diligence of the property, the title of ownership, they approve the loan. Buying a house with the help of loan also saves the buyer a sizable amount of tax.
Adding a co-owner:
You can add your spouse to share the burden of the loan with the borrower. This not only gives tax benefits but also have benefits in stamp duties.
Owning a property in metros gives a better return in future, but they also hold a hefty price tag. If you are planning to rent the second home in metros, it is better to buy a small house which will provide you with enough rent in future. If you are looking to buy a property which is under construction, make sure it is by a reputed builder. There are many risks involved in buying property which is under construction and it is wise to make sure the risks involved with the second property are less. If you are buying an already constructed house, there’s a good chance of negotiating with the developer, since the demand for real estate is low these days.
Budget:
It is very important to fix your budget before you think of buying a second home. Some banks and websites provide you approx idea of how much you can afford to invest in your second house. The budget of your second home should be based on that loan amount. Buyer should make sure that investing in a second house does not make a huge dent in their regular expenses and also keep future expenses in mind and still are able to save enough for a rainy day.
Bank Loans:
Banks generally offer up to 80 percent of the loan for the property, the rest 20 percent has to be paid from your own pocket called margin money. The cost of buying a house also includes registration costs, stamp duty etc. Banks generally include these costs in their loan amount, but the buyer should be ready and have enough saving to pay for the margin money. After banks have conducted a due diligence of the property, the title of ownership, they approve the loan. Buying a house with the help of loan also saves the buyer a sizable amount of tax.
Adding a co-owner:
You can add your spouse to share the burden of the loan with the borrower. This not only gives tax benefits but also have benefits in stamp duties.
Owning a property in metros gives a better return in future, but they also hold a hefty price tag. If you are planning to rent the second home in metros, it is better to buy a small house which will provide you with enough rent in future. If you are looking to buy a property which is under construction, make sure it is by a reputed builder. There are many risks involved in buying property which is under construction and it is wise to make sure the risks involved with the second property are less. If you are buying an already constructed house, there’s a good chance of negotiating with the developer, since the demand for real estate is low these days.
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