Everyone of us wants to have our own house where we not only love but also create memories for our life. This one asset give a sense of security to our family and which we pass on to our next generation.However, our next generation is free to use the property as their own way. It takes a lot of pain to get a loan to buy our first lifetime property but what if we finish before the completion of the loan tenure and still have abundance of money or the capability to take a second financial responsibility? Yes, there can be a situation when we still have some time left when we can take a second financial responsibility to secure our next generation life and provide them their own house to live. This may be to secure our own life and as well as if we have more than one kid.
But there are many questions that come in everyone’s mind. Are you eligible for a second home loan? Can you apply for a second home loan? How to finalize your second property? How can you finance the second property? What if you still have your name in defaulter’s list even when you have completely repaid your loan? What if you have a low credit score?
Read: Escape from defaulter’s list and be a good creditor.
Read: How to improve your poor credit score.
Let’s read ahead to understand the key points to finance your second home.
Anyone can apply for a home loan for a second home loan. However, Banks/ NBFCs are quite strict in such cases and do a deep assessment of your financial standing. On the other hand, the lenders would prefer to lend you a loan only if the market value of your first property is more than the second property which you are planning to buy. There may be a situation when the lender is still not convinced, that you should take a second home loan even when you are backed with your investments standing. This could include your shares, jewellery, mutual funds, insurance and other assets.
Read: Plan your Home Loan EMI’s.
This is the first option that everyone thinks if the property is not being used for the residential purpose. If you are planning to have a second home and a second financial liability then it will suit you better to live in your newly bought property renting out your first property. This in turn will help you to pay the new EMIs for your second home.
In case you are already running with a home loan on one of your property and doesn’t want to plan to borrow a separate home loan, then you can also opt to add the new EMI’s to the existing EMIs you are paying for your first mortgage. This is also known as a top-up loan. Applying for a top-up loan with the same lender would also save you from the trouble of going through the new loan-taking process.
Read: Avail a top-up instead of unsecured loan
While planning to buy your second home you can always opt to put your first property as a security or collateral with a Bank/ NBFC to get your second property financed. Using your property to borrow a loan is known as loan against property. The loan amount is decided as per the current market value of your property.
However, the other factors are also assessed that affect your eligibility to borrow a new loan which includes your age, income sources, credit score and most importantly your past repayment track.
Read: Factors affecting the EMI calculation.
Read: Benefits of loan against property