While the first home loan helps one to unlock the door to that dream house, the second loan can help to build that getaway home beside the sea, in the hills, or a second income stream by renting it out in a city or town.
In principle, anyone is entitled to apply for a second home loan. However, everything depends However, everything depends on the track record of servicing the existing loan, credit score and income-expenditure balance. Procedurally, applying for a second home loan is not much different than applying for the first one. However, it is seen that most people submit the second application after extinguishing the first one.
Second home loan not impossible
For most a home loan is the biggest financial transaction in their lives. Therefore, the subject of a second loan, to state mildly, is quite daunting – daunting but not impossible.
The repayment capacity is perhaps the most appropriate benchmark to decide whether one can apply for a second home loan. The lending institutions will assess the eligibility of the applicant which mainly consists in assessing the ability to keep repaying the EMIs (equated monthly instalments) for two home loans simultaneously.
Repayment capacity big criterion
Bajaj Housing Finance advises that one can use a home loan eligibility calculator or a home loan EMI calculator for a prospective applicant to check for oneself primarily how difficult or easy the obligation can be.
Most lending institutions advise the following for those desirous of approaching the subject of a second home loan.
Cash flow vs EMI
One, the applicant should find out how much of the monthly steady cash flow is consumed by the EMI of the current home loan. This is necessary for scheduling the second EMI.
Two, one should try to pay up as much as of the cost as down payment so as to reduce the demand for EMI, which, in turn, brings down your debt servicing obligation every month.
Income tax benefits
One should also pencil down the attendant fees that are needed for processing etc.
Another important point to bear in mind is that income tax deductions are available when one buys a second home too. Section 80C of the Income Tax Act allows tax deduction on the principal of the second home loan up to Rs 1.5 lakh.
While many are taking a home loan in their thirties, one can consider a second loan into their forties if certain conditions are met. Personal Finance Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
