Finance your Second Home with these Tips
Feb 05, 2020 Home Loan
After buying a home and repaying most of the home loan, most homebuyers want to invest in a second home. But often homebuyers are not aware as to how to fund their purchase.
We share the tips that can help you to finance your second home:
We share the tips that can help you to finance your second home:
- Another home loan: To fund your second home purchase one can always approach the banks or financial institutes to give out a loan. However, the banks are much stricter as when approving the second home loan. They assess your financial standing carefully to make sure whether you are capable of repaying the loan amount or not. If the banks do not approve your home loan, one can get the home loan against the assets like jewellery, bonds, insurance, mutual funds etc.
- Top-up loan: If you do not want to go through the entire hassle of retaking the home loan, then you can ask for a top-up loan. The EMIs of the first loan you are paying will be clubbed with the EMIs of the 'second' loan you will take.
- Property value: When giving out a home loan for the second time, the banks try to look into the market value of both the properties. It is advised that the second property you are buying should be cheaper than the first property to make sure that your home loan gets approved.
- Renting the property: Most often, people rent their first property and then take out the home loan to buy the second property. This help is keeping the financial flow in check without any hiccup of EMI payment. The banks are assured as well that along with the rent amount, you will be able to pay your home loan EMI.
- Loan against property: Another great option to get a home loan is to use your first property as an asset and get a loan against it. The banks will approve the loan on the current market value of the property, and a homebuyer can add their own savings to complete the purchase.
Buying a second property has its own merits and demerits, not to forget the tax advantage that comes with it. However, the experts' advice the home buyers to carefully invest in the second property making sure that their finances are not affected by paying the home loan EMI for two houses. One should also carefully read the terms and conditions of the home loan application before filling out the form.
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