How to Prepare Financially for a Second Home?
In India, buying a property is considered as a huge financial investment if the buyer already has a home and is settled in it. It is a reflection of the social and financial status of an individual. Many amateur investors rely on getting into the realty sector to incur profit in the upcoming future.
While it is easy to identity a prospective property for investment or for future use, it is still hard to plan the finance for the same. The whole process toils an individual and the complexities involved need not be mentioned separately. Here in this article, let us see how to prepare financially for a second home:
1. Opting for a home loan for the second time:
You don’t have to worry that you cannot get a second home loan if you have availed that financial aid already. You can go on to apply for a home loan again if you are financially capable to repay it. That being said, lenders evaluate the application process very strictly in order to ensure that you are capable of repaying it without any problem.
On the brighter side, if the property value of the second home you are buying is lesser than the market value of the existing property, it is easy for them to approve the loan. If the lenders are still sceptical about your credibility, you can show your investment portfolio with good profitable investments as security for the same.
These investments can be in any valuable form such as mutual funds, partnerships, businesses, jewels and also insurances. This happened to me as I was planning to buy my second property in one of the apartments for sale in Pallavaram, which was much cheaper than the property I already own. At this point I had to showcase all my other properties as a security to get the home loan sanctioned for the second home.
2. Availing a loan against existing property:
To prepare financially this is the simplest approach, you can always ask the lender to consider your first property as an asset for the second home loan that you are availing. This concept is called as taking a loan against property, and they provide a reasonable home loan amount by referring to the present property value of the existing property.
3. Choosing a convenient top-up loan:
If you will be able to add another loan to your existing loan and pay for both the EMIs at the same time, you can always opt for a top-up loan. This can be done when you don’t want to avail a separate loan for your second property. By applying for this top-up loan, you can always save yourself from the excruciating process of getting another loan approved and sanctioned.
4. Provide the first property for rental revenue:
For people who want to move to a new flat in chennai, then they can utilize the first home as a product of revenue, then you can rent the first property and move into the new property that you buy. With the rental returns from the first home, you can always manage to pay the EMI for the second property quite easily.
Kindly check out our another blog on Buying a Second House Good for Investment.