5 Things To Know Before Buying A Vacation Home

By | April 10, 2018

Planning to invest in some real estate? How about buying a vacation home? Here are five things to consider before you take that property plunge.

5 Things To Know Before Buying A Vacation Home

Planning to put your money into some solid fixed assets? Great idea! Now is a great time to buy a home. If this is going to be your second home purchase, might we suggest investing in a vacation house?

The market for vacation homes is growing by 12 to 15 percent in India every year. There was a time when buying a holiday home was only for the rich. Today, growth in the market is being driven by the middle class that has more disposable income at hand.

Investing in real estate is always a great idea but if you needed convincing about buying a vacation home, here is some.

Reasons You Should Invest in a Vacation Home

There are multiple reasons for you to consider buying a vacation home. Not only will you have a “home away from home” for a spontaneous getaway but will also avail quite a few financial benefits of buying a holiday property.

Vacation homes are cheaper because of their – yes, you guessed it – location!

Location is the holy grail of all property-related aspects. Vacation homes are mostly located in secluded, non-commercial areas that make them much more affordable than just another one-bedroom house in the heart of a bustling city.

According to research, the most popular vacation home locations include areas like Uttarakhand, Ooty, Coorg, Himachal Pradesh and Goa. Some areas on the outskirts of Mumbai like Alibag, Khandala and Lonavla are also pretty popular. These locations are desirable for their amazing weather, serenity and peace.

Another upside to buying a holiday home is you can always let it out for rent, helping you make some extra money. You could also use the property as a collateral against a loan in case you need to borrow some money from the bank!

A vacation home also ensures you great tax benefits. You get a 30 percent write off on repairs and maintenance on the property’s annual value. Taxes paid to the municipal or local authorities can be claimed for deduction as well. If you are letting the house out on rent and you took a Home Loan for the property, you can claim deductions on the interest you are paying on the home loan.

Isn’t that awesome?

However, there are quite a few things you need to consider before taking that kind of a property plunge because buying a holiday house is not just an investment, it is also a lifestyle choice.

Have You Considered These?

  • Location!

As mentioned earlier, location is the main priority when it comes to any kind of real estate decision. Spend some quality time at the place you plan on buying the property. Analyse future growth aspects of the area, especially tourism. Don’t forget to factor in the competition when it comes to letting out your house on rent. It’d be easy to get carried away with rental plans when it comes to a vacation home. Set realistic rental income goals.

  • Financial Situation

Are you paying off a Personal Loan already? How much are you earning? Will you be able to take on the cost of another home? Do you already have a certain amount of debt to pay off? Ask yourself some of these vital financial questions before buying a vacation home. A holiday house is a luxury investment option.

  • How Far Away or Close You Live

It’s obvious that your vacation home will be away from your primary house. However, you will have to consider how far you will be living from your vacation home. Why you ask? One word – maintenance! If you are going to be letting the house for rent, you could just be taking on added responsibility. It will be easier for you to manage the property and the seasonal rent rush if you lived nearby. Or else, you would just have to hire someone to manage the property for you.

Don’t forget to have an emergency plan. Find someone trustworthy to keep an eye on your property while you are away. Make periodical visits to your property.

  • Resale Ability

Will you be able to sell off your property if and when the need arises? Will you be able to make a profit on it or should you brace for a loss? How will you market your property for the tourism season? What about other costs like Home Insurance? Assessing the costs and resale value of your vacation home is more important than you can imagine. You don’t want to get stuck with a ghost house now, do you?

  • Financing Your Vacation Home

If you have some spare lakhs and crores lying in your bank account, you could very well fund your vacation home leveraging that money. However, there are various other ways to finance your dream holiday home. Considered getting a Home Loan yet?

Devise a budget to track your expenses. Make an excel sheet and record all your expenses for a month, deducting them from your income. Cut off the luxury items that you can do without and start saving for your EMI!

A Home Loan can offer you a range of benefits on your home purchase. Did you know you could save bundles of money in taxes if you applied for a Home Loan?

There are a few pointers to keep in mind while financing your vacation house through a Home Loan though:

  • Never get a vacation home loan against your primary property. In case things go wrong, you could be left homeless!
  • Make the down-payment as huge as possible. Why? So your EMIs are smaller and easier to pay off!

Want to take a look at some of the best Home Loans in town? Here are a few that offer great interest rates and attractive offers:

The SBI Home Loan offers you a great deal with a floating interest rate at 8.35%. It has a special rate for women at 8.30%. You can borrow up to Rs.10 Crores for a long tenure of 30 years. You also have flexi-pay options and have zero pre-closure charges. This home loan also allows the customer to deposit and withdraw amounts from linked accounts depending on the amount of cash available in the account.

You could choose from a variety of IndiaBulls Home Loans that offer floating interest rates ranging between 9.40% and 10.40%. Some loans offer a fixed rate for three years and floating rates thereafter. Borrow a maximum of Rs.3 crores and pay it off in a long tenure of 20 years. The loan application process is pretty simple. You can get it approved in about a week or two and complete all the formalities in the comfort of your home.

The PNB Housing Finance Loan has an expansive network of operational branches where you can find a loan to suit all or any of your property needs. They offer a mix of floating and a fixed rate of interest that swing between 9.95% and 10.40%. Enjoy some easy repayment options and a speedy approval process. Loans get approved in just about 4 days!

This loan too offers you affordable interest rates with long tenures. Starting from just 8.45%, you can borrow up to Rs.10 crores and pay it off in 30 years. In fact, the loan can be sanctioned even before you have selected the property. Some select customers qualify for pre-approved Home Loans as well. The loan also has a ‘Balance Transfer’ feature that allows you to switch to ICICI bank and enjoy long-term savings.

Women applicants get a special interest rate offer at 8.40%. Borrow up to Rs.10 Crores for a tenure of up to 30 years. Enjoy their fast approval process (just 4 days) and all that within a few clicks of a button. The approval process is carried out online and there are no pre-closure or part-payment fees either.

This loan too waives off pre-closure and part-payment fees. Floating interest rates starting at 8.55% and loan tenure is available for 30 years. There are no one-time processing fees either. You can chop your EMIs to your choice. They also have a balance transfer facility and end-to-end doorstep services.

Already applied for one but it got rejected? Find out some surprising reasons why your Home Loan got rejected.

Anything else we can help you with?

All information including news articles and blogs published on this website are strictly for general information purpose only. BankBazaar does not provide any warranty about the authenticity and accuracy of such information. BankBazaar will not be held responsible for any loss and/or damage that arises or is incurred by use of such information. Rates and offers as may be applicable at the time of applying for a product may vary from that mentioned above. Please visit www.bankbazaar.com for the latest rates/offers.

2 thoughts on “5 Things To Know Before Buying A Vacation Home

  1. RajanChauhan

    Both Loans & Credit card helps the households meet any shortfall. However, the credit card interest is almost double of a credit card. If you can plan your future expenditure, then you must take a personal loan.

    Reply
    1. Team BankBazaar

      Hi Rajan,

      That’s right, Rajan. Keep reading our blog for more insights into the world of finance.

      Cheers,
      Team BankBazaar

      Reply

Leave a Reply

Your email address will not be published. Required fields are marked *