Buying property has always been known as one of the best forms of investment. This is why so many people look to buy one house to live in and another solely as an investment. The second house can be put out on rent or simply used as a vacation home where you head to once or twice a year to unwind.
Now, no matter what the reason is, buying a second house is definitely a big decision and one that requires sound financial planning. So, before you start looking for places, take a look at 5 key aspects that need to be kept in mind:
- Be familiar with the location of the property
If you are looking to buy a second home in another city, it is important to be aware of its surrounding location. A place that is set to undergo infrastructural development in the future is a preferable option. Make sure to get a house that is close to educational zones, corporate hubs, airports, railway stations, and so on.
- Have a strong reason to purchase
First and foremost, figure out whether the property in question is being purchased as an investment or for personal use. If the property is purchased as an investment, make sure to check on how it can achieve the financial objectives that you have in mind. Investing in real estate might not provide great returns in the initial years, so it is best not to expect short-term results. However, the value of the property can improve over the years, thus proving to be beneficial in the long run.
- Be thorough with your financial strength to be sure of affordability
This is one of the most important factors to consider before buying a house. If you are still in your 30s or 40s, it is quite likely that the EMIs of the first home loan are still being repaid. This is why it is important to understand whether it is possible to take on a second home loan’s EMIs without compromising your current lifestyle. Of course, if you have enough savings to make it happen and expect a raise in monthly income in the near future, you can go ahead and apply for home loan to buy a second house.
- Get covered by home insurance
While making a big investment, it is important to secure its financial safety. It is quite likely that the second home that is purchased will remain empty without many visits. This is the reason why a home insurance plan is essential to cover any man-made or natural calamities. Most financial institutions providing home loans also offer home insurance policies, so speak to your lender for your second home’s coverage.
Buying a second home can be a dream come true, all that is needed is a good plan and financial discipline. The home loan interest rate has never been lower, so this is a good time to take a loan to buy a house. Make use of a home loan EMI calculator to know about the monthly instalments. This can help you be prepared with a repayment plan.
Krishna Murthy is the senior publisher at Trickyfinance. Krishna Murthy was one of the brilliant students during his college days. He completed his education in MBA (Master of Business Administration), and he is currently managing the all workload for sharing the best banking information over the internet. The main purpose of starting Tricky Finance is to provide all the precious information related to businesses and the banks to his readers.