In today’s era of urbanisation and increasing wealth, many people have set the goal of buying a second house. Investing in a second home is an attractive opportunity; it not only helps meet financial goals but also meets personal needs. It also helps one to diversify their real estate portfolio and can also generate additional income from rent. So today, let’s take a look at some basic guidelines before buying a second home.
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Know why you are buying:
Atul Monga, CEO and co-founder of Basic Home Loan says that first, one should decide why they want to buy a second house. Keeping this reason in mind will help one decide where and what type of property one should buy or invest in. According to a study by 360 Realtors, the demand for holiday homes or second homes has increased in India since the pandemic.
Where to start:
Research the location, keeping in mind factors like your lifestyle, property price, future rental income (if applicable), proximity to friends and accessibility. Also, check on property tax, insurance costs and other rules.
Review your financial situation:
Before thinking to buy a second home, one should first determine their financial stability, especially if they have any debt not cleared. Make sure you can repay the loan before you take another one. One should always keep in mind that the ratio of earnings to loan repayment should be less than 50 per cent.
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Make arrangements for the down payment:
During the time of the down payment, one should try to make the maximum down payment. Make a down payment of at least 20 per cent or more to reduce the loan amount and monthly payments.
Other expenses:
Keep in mind additional expenses like property tax, insurance, maintenance, or other future expenses. One should check that they can easily handle the new responsibility within this budget while maintaining their current lifestyle.
Legal aspects:
Before starting the journey of buying a second home, one needs to know about the legal aspects associated with it. Check that there are no legal encumbrances to the property. Make sure that the person selling the property is its legal owner and that there is no dispute going on over this property.
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Don’t forget to take into account the tax advantages of owning a second property.
