Top 5 Things to Consider Before Opting for a Second Home - Home Loan Stories

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07 JUNE, 2021

Buying a second home is an achievement in itself with the increasing real estate prices. Due to the declining interest rate over the past couple of years, this might be a good time to make second purchase with the help of a home loan. However, it is a capital investment and so it is important to be thoughtful when you make a second purchase with a home loan, whether you buy it for investment purpose or for retirement. There are some aspects that you should consider for a hassle- free process.

Choosing the right location

Understanding your long-term goal of purchasing another house can help greatly with choosing the right location. If you are planning to buy another property for yourself or your parents’ retirement, it would be best if the location is in a prime area which is well connected with basic amenities. Even if the purpose of a second home is to earn additional income from the rent, the location is crucial. You must pick a region that can fetch you good appreciation and a higher rent. Therefore, evaluating the future purpose of your home is essential to take the right decision.

Ongoing Home Loan

Many home loan borrowers are unaware of the fact that they can get a second home loan even if they have an ongoing home loan. So, as a home loan borrower, one need not pay off first home loan completely in order to purchase another property, provided they can afford both the loans at the same time. However, it is crucial to know that the lender shall review your current home loan repayment history before approving the second loan application.

Financial stability

Considering your financial status and affordability is another vital aspect of investing in a second home. Before you invest in a second home, you need to estimate if you will have enough funds left to support other future goals such as children’s education, marriage, retirement, etc., As home loans have a long repayment tenure, reviewing your financial condition and repayment abilities while you have an ongoing home loan is a must. Ensure that you can afford a home loan as well as manage other plans.

With enough savings, you can pay in cash or apply for a home loan with a low interest rate for a second home. Opting for the latter would help you save taxes too. You can claim the principal amount and the interest component of your EMI as a tax deduction.

Additional charges and fees

While estimating the total cost of your second home, you should not forget the additional charges related to maintenance of the property. A new house comes with several such expenses, which include amenities, parking space, registration cost, insurance, maintenance charges, and any other additional fees. Though such charges may not seem much, the overall cost of your home can turn out to be more than expected. Hence, you should calculate the total amount before opting for a second home.

It is crucial that you consider the above-mentioned aspects before deciding on buying a second home. Whether you buy it for your own use or investment, it is important to ensure your financial viability so that it does not stress on your daily expenditure. Invest in a second home and get a home loan with a flexible tenure and lucrative interest rate from Kotak Mahindra Bank, today.

Disclaimer: This Article is for information purpose only. The views expressed in this Article do not necessarily constitute the views of Kotak Mahindra Bank Ltd. (“Bank”) or its employees. Bank make no warranty of any kind with respect to the completeness or accuracy of the material and articles contained in this Newsletter. The information contained in this Article is sourced from empaneled external experts for the benefit of the customers and it does not constitute legal advice from Kotak. Kotak, its directors, employees and the contributors shall not be responsible or liable for any damage or loss resulting from or arising due to reliance on or use of any information contained herein.

Top 4 Things to Consider Before Opting for a Second Home

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