If you already have an existing home loan then going for a second one could be a time consuming process in terms of financial planning. You not only need to make the new loan instalments are accommodated for but also ensure that the existing home loan EMIs do not get hampered, in any way. This will help to build a reliable payment history thereby improving your credit score, in the long run.
Here’s what you must consider before taking the decision to buy a second home on EMI -
Lender: since, this is the second time you are in need of finance you can choose to get the loan from the same lender. This is because they are familiar with you and your loan profile and can give you better offer on the loan.
Payment History: if you have been paying off the existing loan well then you have all the more reasons to opt for second loan. The reliable payment history will add up to your credit score and ensure you get the second loan on better negotiated terms even if you wish to take it from a new lender.
Debt-to-income Ratio: before applying for a new loan you must evaluate the monthly dues on the home finance. This will help you easily pay off both the loans without experiencing a cash crunch or having to compromise on your lifestyle.
Loan Structure: get yourself educated about every aspect of the loan offer. For instance, the prepayment, foreclosure, relaxation in paying up monthly dues etc. this will allow you to have the loan structure customized as per your needs to make the most of it.
Read Also: More than One House? Here’s How You should Plan your Home Loan EMI
Aman Khanna is an experienced financial advisor who is well known for his ability to foretell the market trends as well as for his financial astuteness. He has an MBA in finance from Toronto University as well as years of experience delivering seminars on sound financial practices and debt management.