Why You Should Buy A Second Home?
Buying a second home might not be as difficult as buying the first one. It has a number of benefits in terms of an investment option or getting a regular income via monthly rent with many additional benefits.
If you already own a home and are still left with some cash to invest, buying a second home is a good investment option. Buying a second home might not be as difficult as buying the first one. Further, it has a number of benefits in terms of an investment option or getting a regular income via monthly rent.
- But, before you go ahead with the plan, you should consider the following: You have no overhead debts: You need to ensure that there are no existing debts because buying another house would require a lot of money and you might end up taking a home loan. So any existing loan might just bulk up the loan overheads.
- You have enough emergency funds: It is important that you have enough emergency funds and reserve funds before you plan to buy a second home. Until you set aside some money for unforeseen circumstances, there is no point expanding properties and making new investments.
- You have a stable good source of income: In order to maintain two homes, it is important that you have a stable and good source of income. This would ensure that you’ll be able to manage the household expenses and the maintenance of the second home efficiently with the cash inflow. In case you take a home loan for the second home, you would also need to pay the EMIs (Equated Monthly Installments) apart from the household and maintenance expenses.
With all these points being fulfilled, you could buy the second house without posing any financial problems further.
Going for a second home would open the doors to new avenues of investment. Here are a few reasons why going for a second home would be beneficial:
- Earn the rental income: With soaring real estate prices, rental income has also increased manifold over a period of time. This makes buying a second house to rent out a good option for a stable regular source of income.
- Owning a second house would mean adding up to assets: To own a second house, is you add up to your assets. As the real estate in India is increasing at a fast pace, the value of the house would also increase over time. This would result in a high-value asset over a period of time. This could be sold later at a higher price to liquidate the asset, meanwhile enjoying the rental income adds on to the bonus perks.
- An option to move to a new house: Having a second house would mean you have the option to move to the new house if you find it more convenient, renting out the previous one.
- Tax deductions on interest under Section 24: If you have taken a loan to buy your second house, you can get tax deductions up to Rs2 lakh (if the house is not rented out) towards the interest paid and a tax deduction up to the amount paid towards interest if the house is let out on rent. This helps you save tax on the loan at the same time, adding a high-value asset.
To increase your assets and to create new options for additional income, buying a second house when you have sufficient funds is always a good idea.