Things To Consider Before Buying A Second Property

Second Property

Property investments are touted as a lucrative method to grow one’s wealth corpus by numerous financial advisors and experts, which is good news for buyers shopping around for a second property.

A study published by Gallup reports that property investments are rated as one of the safest long-term investments, given their minimal risks and the guarantee of a regular income.

While buying a second property for either your own use or as an investment is a sound idea, it is a purchase that still warrants substantial funding. Here is where a home loan can come in handy.

If you have already availed of a home loan before to assist in buying your first home, you would be well aware of its tax benefits along with its other features, such as sizeable funding and competitive interest rates, and with the availability of online home loan forms, one can avail of a home loan in just 2 to 3 days now.

In short, a second home loan not only helps you diversify your investment portfolio but also acts as an investment in itself.

This article talks about why buying a second property is a good choice and how a second home loan can help you.

Advantages of a Second Property Investment

Second Property Investment

Investing in a second property helps in multiple ways – it can be your getaway for a vacation, it can double as a source of regular rental income, and most importantly – it is a valuable asset with the potential of being used for reinvestment opportunities. Here are some advantages of investing in a second property:

1. Additional Source of Income

Your second property can very well be a second source of income when you choose to rent it out.

What’s more, you can even use the rental income to pay your monthly EMIs, so you don’t break the bank to keep up with your repayment plan for your second home loan. Once the home loan is repaid, you can enjoy the rental income yourself, or invest it elsewhere.

2. Vacation Getaway

Many prefer buying a second property in a holiday destination, such as a hill station or a beach town. It can not only be a holiday home for you but can also tap into the tourism revenue stream of the location by doubling as a bed and breakfast or a homestay for seasonal tourists.

3. Low-Risk Investment

Property investments have lower risks attached as the real estate market is less volatile compared to other investment sectors in the market.

Above that, most investors are guaranteed returns on their property investment, either through rental income or by the rising capital value of the property.

4. Versatile Asset Uses

Your second property can be the ideal collateral for other mortgage loans, such as a loan against a property when you need urgent funds.

It can help you address a variety of needs, such as a business expansion, an upcoming wedding, or an expensive medical procedure.

Why Take a Second Home Loan?

Second Home Loan

Once you have made up your mind about investing in a second property, you should also consider the benefits of taking out a second home loan, of which the tax implications are the most notable concession. Here are the tax benefits on a second home loan:

  1. A tax deduction of up to Rs. 2 Lakhs on the interest component of your home loan, for a self-occupied property, under Section 24(b)
  2. A waiver of tax on the interest component of your home loan for a property that is let-out
  3. A tax deduction of up to Rs. 1.5 Lakhs on the principal repayment of your home loan, which can also include the registration fees and stamp duty charges

If the second home loan is a joint loan, then all co-applicants can claim these benefits, provided they are also the co-owners of the property.

Conclusion

Everybody works hard to insulate their savings and collect enough to keep themselves and their families secure. Your investments should be in line with your future financial goals and help your wealth grow to accommodate any big-ticket dream you have.

Consider availing of a home loan to aid in the purchase of your second property. You won’t only diversify your investment portfolio, but you will also save significantly in terms of tax payable.

Read Also:

View Comments (0)

Leave a Reply

Your email address will not be published.

© 2019 Issue Magazine Wordpress Theme. All Rights Reserved.

Scroll To Top