Tips to get another home loan if you already have one
New Delhi : Every person in this world dreams of owning a home. But houses today are costly. Most of the population cannot afford to pay the entire price at one go. Thanks to the lenders who have made it possible for people to complete this dream. Today, you get home loans very quickly. But what if you already have an ongoing home loan and you need a second home loan? Though there are some conditions you need to fulfil, it is not impossible to avail a second home loan. It is essential to have a good credit score and income to give the assurance of repayment to the lender. Following are some steps that can be followed to avail a second home loan:
1. Think wisely before taking up the second home loan. Consider all the possible expenses in future, look at your present and potential income in the future. If the situations are favourable, then you can prove to the lender that you can repay the second home loan. But the final decision remains with the lender.
2. Debt to income ratio is one of the criteria to assess the repayment capacity of the borrower if he/she is taking two or more loans at a time. If you have a higher monthly income compared to the debts, you fit in the home loan eligibility criteria for the second home loan. This assures the lender that he won’t lose his/her money.
3. If you are buying the second home for investment, then you need to show the anticipated rental income based on the rental history of the house. You also need to compare the rental and the occupancy rates of the property before applying for the loan. The lender will consider only 70%-85% of the rental income based on which you will get a higher or lower loan amount.
4. Be ready to pay a higher down payment for the investment or second home. For a primary residence, you pay 5% of the sale price as down payment, but here you must pay as much as 35% of the sale price of the home as a down payment. So, arrange the money from your savings, relatives or friends.
5. The lender will ask for a higher interest rate on the second home loan if you have an ongoing home loan. Be ready to pay a maximum of 1% higher interest rates than standard for this second loan.
6. Build a security fund that will be reserved to serve any financial hardships in future. You can show your liquid fund to the lender to give him/her the assurance that you will repay the amount of the second loan as per the commitment.
7. Your credit score must be higher than 650. Check the home loan eligibility criteria for the second home loan and see if your credit score matches those criteria. If not, then try to increase the credit score by reducing debts, increasing the income and reserved funds.
Thus, you won’t face any issue availing two home loans parallelly. Take the seven points mentioned above into consideration and get the second loan without any problems.