Buying a second home can be a source of leisure as well as income. The idea to purchase a second home appeals to many of us as an investment in property is one of the most powerful options for creating an additional source of income in India.
Buying a second home, not only provides security of investments but also helps you avail significant tax savings on the financing and offer sustainable returns in the form of rental income.
A home loan can help you buy your second dream home with a host of benefits. However, the lack of awareness regarding high real estate prices makes people doubt their decision to purchase a second house.
Let us take a closer look at the benefits and pitfalls of buying a second house in India and the role of home loans in the process.
Benefits of Buying a Second Home
Long term profits
All assets fluctuate in value. Buying your second home in a particularly popular location will increase your chances of a higher gain. It can be a source of income through rent, leasing, or reselling it.
Investment For Future
Your second home can be your support after retirement. Activities such as children’s education and wedding need planning as well as proper funding. One must be ready to take care of all these expenses.
Investing in a second home is also a way of reducing taxes on your monthly income. Under Section 80 C the EMI enables them to claim the benefits for the principal repaid as well as interest under Section 24 B.
As per the current Income Tax rules in India-
- An assessee is exempt from paying income tax for principal amount repayments up to Rs 1,50,000 under section 80c (clubbed with other benefits under this section).
- Interest paid on housing loans up to Rs 200,000 is also exempt from tax under section 24(b).
Moreover, the intangible benefit of owning and passing property from generation to generation – especially a home that has been and will continue to be the site of many happy gatherings – is incalculable.
You can apply for a home loan from reputable banks like Axis Bank that offer affordable home loans at favorable home loan interest rates. Both salaried, as well as self-employed individuals, can apply for a home loan. Also, now, people can apply for a home loan online.
Disadvantages of Buying a Second House
Return on properties are usually expected to be high; it is, however actually not so all the time. God forbid, but if, any natural calamity occurs in or around the area where the property is held, the same will likely yield negative returns in such a situation.
By purchasing multiple housing properties, one must repay such loans on time, and this entails substantial outgo of funds, which in turn leaves limited or no funds at all for investing elsewhere.
Inflexible repayment schedules can severely constrain any mid-term investment opportunity elsewhere, due to fund scarcity.
Invest in Your Dreams, Get Home Loans to Do the Bidding
Buying a second home needs proper research, and one should analyze its benefits and shortcomings alike. It would help if you kept in mind both the sides while taking a new home loan for your second home. You can save on tax on your second property too, and it can be a source of income by generating rent. Applying for a home loan will assist your dream of buying a second home in a pocket-friendly way.
If you own multiple residential properties, it is advisable to ensure that the property is let out for rent. The rental income can then be utilized for further investments.