If you are a second-time homebuyer, you might already be familiar with the usual process of homebuying. But the process will not be the same the second time around.
After all, the real estate market has changed since the pandemic, and so has the homebuying process. So, it is wise to educate yourself beforehand and understand the obstacles you may face. So, here are four tips to help you out.
#1 Start your loan application process ASAP
Be careful not to be overconfident about your loan application process. While the online application process is quick and simple, the approval process for lenders has changed considerably over the years. So, getting a new home loan might not be as straightforward.
So, before you set out to buy your second home, ensure that you fulfil all the eligibility criteria and have your documents ready. With proper preparation, you will close the deal much faster.
#2 Take a home equity loan
If you have an existing loan on your current property and need another one, go for a home equity loan. With a home equity loan, you receive a credit line equal to the loan amount you have paid off.
Suppose you took a loan of Rs. 50 lakhs for your first house. You’ve paid off Rs. 30 lakhs. Then, if your home’s value is still Rs. 50 lakhs, you can take a home equity loan and get a credit line of Rs. 30 lakhs. You can borrow small amounts from this credit line whenever you need to. What’s more, you will only have to pay interest on the amount you withdraw.
Additional Read – Important Things to Consider Before Buying Second Home
#3 Rent out your first home
If you want to move into your second home, you can consider renting out your first one.
The monthly rent from your first home can help you reduce the EMI pay-out. Use a home loan EMI calculator to estimate your EMI in advance and evaluate how much you can cover with rental income. Not to mention, rental income is also an excellent source of passive income in the long term.
#4 Buy and sell at the right time
If you want to sell your old house before moving into your new home, balancing the timing will be the first challenge you will face as a second-home buyer.
You might have to make temporary living arrangements between selling your first home and buying your second one. But there are several advantages to selling your old house first.
When you are focused on selling the first home, you can negotiate effectively with buyers and not hurriedly agree to bad offers. Conversely, if you buy your second home before selling the first one, you may feel pressured to cover your remaining EMI payments. And so, you may accept a weak offer and lose money.
Additional Read – Do’s and Don’ts for Married Couples When Buying a New House
To sum up
With the above tips under your sleeves, you will be able to navigate the purchase of your second home smoothly. Besides, if you need funds for your second home, turn to Tata Capital. We offer affordable home loan interest rates and flexible repayment options.