bhavesha

Hi Experts,

I own a flat in Bangalore & Paying EMI's to clear off the bank loan. My question is should i pay the balance amount on this flat before considering a second home Or Buy a second home & rent out one of them?

I am confused, pls help!!!

Thanks

Manas007

Hi,

You have two options.
If you are looking for immediate return like monthly rent, then you may go for another apartment or villa (budget would be higher). Again another factor would be your existing bank loan rate of interest(if fixed) and new loan interest. Depedning on which one is higher you need to close one or continue both.

For long term investment you may go for site/plots.

Regards,
Manas

jeetcp

clear existing as fast as you can. Buying a new one will make you loose more.

bhavesha

Thanks @jeetcp & manas,

Currently i am paying an EMI of 18k per month. My idea is to buy another flat in a pre-launch.

It would be at least 3 years by the time my second flat is ready & i am hopeful that i pay at least 70% of the amount.

So, i would then have 30% bank loan of second flat, 18k EMI (this is worst case estimate, cannot increase more) & get atleast 12k rent on my first flat (worst case estimate after 3 yrs, it will definitely be more)....

How does it sound?

Manas007

If I would have been in your place, I will not close my existing loan as new loan will be in higher rate and for pre-lunched or under construction property you are not going to get tax benefit (2.5 lakhs per year as per the existing slab) until occupancy.

Secondly for pre-lunch offers, you need to see how much discount you are getting as compared to under construction projects in that area.
Risk in pre-lunch offer is that builder may increase the price saying all the commodity price for construction has been increased so the flat price. There are may such cases in blore. So you need to check for any reliable builder.

And getting the flat in 3 years which is still in pre-lunch is difficult. It will really take 4-5 years. So your 70% investment will be on hold, which you could invest in fixed deposit for 9% return at least that too yearly. Cumulative will be more.

So I'll suggest do all your home-work and compare and see if you get a under construction flat which can be ready in 1-2 year so that you can move in and rent out your existing flat. Or if you are getting good discount from a pre-lunch offer from a reputed builder who will stick to the sale agreement and complete the project in time.

Hope this helps.

Regards,
Manas

bhavesha

Thanks Manas, it does help !!!