Finding the house of our dreams and acquiring it will be every person’s life goal at some point. A dream home is where you grow and develop a safety net and a place that gives you ultimate peace. A home loan will help you in acquiring that dream house of yours and you are all set to be transcended into serenity.
But what if you, for some reasons need a second home loan on the same property? Or what if you have decided to acquire a second property, for investment purposes or to live in, and are in need of a second home loan for the same? Seems like a scenario out of bounds.
You must be wondering whether it is even possible to avail a second home loan. Well, Regrob is here to tell you that yes; you can get a second home loan. And since we know the next question in your mind is how this can be done, we will dig straight into the detail of it.
There are certain things you should know when attaining a second home loan to ensure it are as easy and advantageous as the first one.
Let us take a closer look at the questions you may have while preparing to go in for a second home loan
Am I eligible for a second home loan? If so, how much loan can I get?
You are eligible. Banks are concerned with safety of their loan and your ability to repay. So as long as their verification establishes that the loan is in good hands and is likely to be repaid then you will be eligible. It all depends on your credit history and your lender.
Now it is important that you understand that the terms and conditions for your second home loan need not be the same as your first one. There may be higher costs you would need to experience upfront, and the terms of the loan could be more rigid as the banks need to be sure of your ability to repay as you have already availed one home loan. Moreover, though banks finance up to 75% of the value of the house, if the loan amount is above 75 Lacs then they may reduce this percentage for the second Home Loan.
In case of a second home, banks derive that it is for the purpose of ‘investment’ as you already own a home. There may be a possibility of a higher interest rate for your second home loan from some lending partners. It is important to understand your eligibility before putting in the effort of applying for a second home loan; it may also be wise to consult a home loan expert as this process can get complicated.
Generally, the home loan amount granted to you will depend on your down payment and your monthly income along with assessment of your other investments. In case you are already paying an EMI for your first house or have other loans such as personal, car, or educational. So, the home loan amount offered by banks can be even lower. Your age is also a factor. The tenure you opted for your previous loan may be reduced now, resulting into increase in EMI and a decline in the loan amount. Click here to read about Calculate your home loan eligibility.
One may want to go for a joint loan with their spouse for incremental loan amount, but the older person’s age will be considered for the loan, which may not be known by the borrowers. This is where expert assistance can help you to understand what to expect from your home loan in terms of amount, tenure etc. and the best product to suit your need.
Do I get any tax benefits on my second home loan?
Tax benefit on loan reimbursement of second house will be restricted to Rs 2 lakh per annum.
Finance Bill 2017 has planned a move by which it may hit hard for those assesse who assembles big savings by investment in second home for tax saving purpose as earlier there was no limit for tax benefit on second home.
As per the proposal, the owner can set off of loss towards second home against other heads of income up to Rs 2 lakh under Section 71 of the Income Tax Act.
Under the present dispensation there is no such limit for set off of loss from house property, which is mainly the difference between the rental income and interest on home loan. In other words, a buyer could deduct the entire net interest paid on the home loan.
Earlier the question was whether the government was subsidizing first-time home owners who were occupying own house or the government were subsidizing the second acquisition of the property by people who have surplus money to invest in real estate. But by this move, The Government is equalized both home owner (whether he is first time home owner or second time home owner).
But by this, individual tax payers will be having loss of tax benefit on the interest amount exceeding Rs. 2,00,000/-
In case of non-self-occupied property, the interest paid is reduced from the rent paid to arrive at the income from house property. In some cases, it may happen that the Interest paid is more than the rent earned which will result in loss from house property. This Loss is allowed to be set-off with Income from any other head. Click here to read Tax benefits on home loan.
The income tax act says that those who own more than one property must treat one of them as rented property. Basically only one property can be treated as self-occupied and others have to be assumed to be rented.
Tax has to be paid on notional rent. A lot of people, who own two properties, assumed the loaned property as rented and managed to claim the entire interest as deduction. Such taxpayers can no longer do so.
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