Do you have plans of investing in a second home? Then you probably are on course to making an excellent investment decision. Buying second home may be a difficult task if the approach to the investment isn’t researched and organized. Additionally, the second home must have the potential of fetching a moderate return on investment (if not higher), in terms of an incremental rise in property value or a regular monthly rental income.
Keeping a few of these mentioned aspects will ensure that you will be on course to making the right purchase decision.
You don’t have any overhead debts: An existing debt or an existing mortgage can affect your repayment capabilities because when buying a new home, you could end up getting a house loan. So any current loan could just add up the overheads of the loan.
- You have enough funds for emergencies: It is crucial to have sufficient funds tucked away for emergencies and even to conserve funds before buying a second home. There’s no sense in expanding in real estate and making new investments unless you put aside some money for the unforeseen circumstances.
- You need to have a stable source of income: It is necessary to have a secure and strong income source in order for two homes to be sustained. This would make sure you can effectively handle the household expenses and sustain your second home with the income you generate.
When you opt for a second home loan, in addition to making mortgage payments there will also be additional monthly costs that add-up such as maintenance of the property, power and electricity bills, and general up-keep expenses that need to be accounted in the monthly and annual expenses.
Once all these aspects are considered and met, you should be in a strong position to purchase a second property without facing any financial difficulties.
Moving to a second home will open the doors to new investment opportunities. These are some reasons why it would be good to move for a second home:
- Benefit from the rental income: Rental income has increased significantly during a period of time with increasing real estate prices. This makes buying a second house a good option for a stable regular income stream.
- The ownership of a second house means adding to your wealth: The value of the house would also grow over time as property in Goa is growing at a rapid rate. This would lead to a long-term high-value asset. It could then be sold to liquidate the asset at a higher price while receiving additional rental benefits.
- The Tax deductions under Section 24: When a loan is acquired for the second house you may receive tax deductions up to Rs2 lakh (when the house is not rented) for interest and a deduction of interest up to the amount paid to interest where the house is rented. That saves you a loan tax and adds a high-value asset at the same time.
In order to improve your assets and earn additional income opportunities, it’s always a great idea to buy your second home if you have enough funds.