Owning home. Isn’t that a dream every one of us nurtures? And realizing that dream with the help of a home loan is no less than a big feat in our life. But a step ahead, some people are seldom able to own a second home as well, whether for investment purposes, vocational or living in it. If you, too, are aiming to buy a second property with the help of an SBI Home Loan, remember that missteps like lack of proper financial planning, selection of poor location and failure to get approval for a home loan can make this a tedious task indeed.
Hence, to ensure your decision to own a second home turns out to be financially rewarding instead of becoming a headache, here’s a one-stop guide to taking these steps before purchasing it with the help of successfully qualifying for SBI home loan eligibility.
The purpose of the second house should anchor the location’s selection.
More often than not, the main aim behind buying a second home is either for rental income, investment or vacation purposes. When you already have a home to live in, buying a second for the living purpose would be rare. And it’s highly unlikely for someone to buy a second house, let alone first, for no reason. So, the selection of that second home’s location should be anchored by the purpose for which it is being bought. In case the property’s purpose is to provide an additional source of income in the form of rent, then ensure that the chosen location has a high rental demand, besides offering a decent level of infrastructure. Whereas in case the second house’s aim is for vocational purposes, then probably an isolated location which is peaceful and closer to nature can be ideal.
Also, remember that a location offering good value coupled with a high scope of capital appreciation every year would be best for those whose aim behind the second house is investment purposes like funding for child’s marriage or post-retirement corpus. Thus, before selecting your location and property and subsequently applying with complete and adequate SBI home loan documents, consider checking whether the location & property are amongst the list of supported properties & locations by the lender or bank or financial institution to ensure ease of loan processing.
Have a thorough analysis of ROI prospects
When taking the decision of finalizing the next property to call as your second home for the purpose of investment, carefully carry out a thorough analysis of the expected return on investment (ROI) prospects of the property. In simple terms, ROI tells the property’s performance by measuring the return on investment (ROI) through the net profit (NP) relative to the cost of investment (COI). The presence of a higher ROI implies the net returns from the investment are higher than its cost. Multiple diverse factors such as the location of the property, infrastructure, availability of public transportation, rental demand, overhead costs affect the ROI prospects. Hence, zeroing in on a property with good ROI as well as availing a home loan with a low-interest rate after qualifying for SBI Home Loan Eligibility are the key aspects that can indeed make this decision of owning a second home financially rewarding one.
Carry out a review of your financial health
Buying a second home will require a proper assessment of both your current and expected financial position, including aspects like cash flow, liabilities, assets etc. When going ahead to buy a house even with the help of a home loan and the possession of all SBI home loan documents ready for application, remember that this decision demands a relatively huge chunk of money in the form of margin (down payment), along with a long term financial commitment to repay the loan EMIs during the tenure. So, if you are planning to fund the second house through a home loan with low and attractive rates as per your SBI home loan eligibility, always ensure you can conveniently service the loan EMIs without spiking up your EMI to income ratio beyond 50-60% as banks or financial institutions or lenders prefer lending to borrowers or individuals with a higher EMI to income ratio. However, for those individuals whose this ratio is beyond 60%, then you can either select a longer repayment tenure and/or make a bigger down payment to reduce your EMI as well as EMI to income ratio too.
Review your credit profile
Thanks to the rising importance of credit score, almost all banks and HFCs tend to prefer lending to applicants having a good credit profile, including a high credit score and satisfactory repayment capacity, including income and existing obligations. Thus, if you are planning to submit an application to fund your second house property after checking all the SBI home loan eligibility criteria, ensure to review your credit score as well before applying for the home loan. This will help in knowing your eligibility as well as creditworthiness, besides giving you ample time to take the corrective steps to increase the score. Also, possessing a high credit score can even fetch you a lower interest rate, especially if coupled with the right set of adequate SBI home loan documents, besides boosting quick approval chances.
Do not disturb other earmarked investments for the second house’s funding.
When attempting to own a second house, remember to always avoid compromising with your other crucial life goals like child’s marriage, higher education, or retirement. Never disturb your emergency fund as well, in your bid to provide a bigger down payment, since the main purpose of this rainy day fund is to tackle financial emergencies and not be consumed for other purposes.
Hence, when selecting your EMI amount post going through the set criterion as per SBI home loan eligibility, make sure to factor in your existing loan EMIs, monthly contributions towards the investments and emergency fund. This way, these won’t be compromised or sacrificed in the process of owning your second home. Moreover, with low and attractive rates and smooth approval in case of having readily available SBI home loan documents, taking a home loan can turn out to be a great idea to fetch these rates to buy your second home.