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Factors to consider before you take up an Investment Home Loan

By Finserv MARKETS - Apr 12,2019
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Factors to consider before Home Loan Investment

An investment home loan is a mortgage solution for those who want to buy property and rent it out to receive income from it. So, if you are looking forward to generating revenue by investing in the real estate market, an investment home loan can be of great help. In short, an investment home loan is a good financing option for your investment property. However, you should make a note of certain factors before you consider investment home loans. Some of these are mentioned below:

1. Can other properties be used as equity?

If you already own properties, using them as equity can be helpful while investing in real estate. The three main benefits of using your other properties as equity for an investment home loan are as follows:

2. It will help you secure low interest rates on your investment loan

It will allow you to choose your closing cost option (Closing costs are the extra expenses over the home’s purchase price. The costs can generally range from two to five percent of the loan amount.) for your new investment. This, in turn, should make buying a new property a lot more affordable.

In some cases, the interest payable on a home-equity loan are tax deductible.

3. Do you have a good credit history?

Since financial institutions check your credit score before approving an investment home loan, it is essential that you maintain a good credit history. A high credit score will allow you to secure an investment loan with the best interest rates. One must also note that your credit score will take a hit when you apply for a home loan. This is because the first step a bank or a Non-Banking Financial Company (NBFC) like Finserv MARKETS will undertake is to extract your credit report. This is called a ‘hard inquiry’.

4. Can you make a substantial down payment?

A substantial down payment will increase the chances of high returns on your real estate investment. In fact, in most cases, you will probably need to come up with a 20% down payment to qualify for an investment home loan.

5. Is there potential for a high Return on Investment (ROI)?

Before making a real estate investment, it is crucial to ensure that the property has high potential and promises interesting returns. It is possible to earn revenues from an investment in real estate by renting out the property. The profits from real estate can also help you to save for retirement or for other important events of your life. Therefore, it becomes essential to choose the investment property wisely.

Now that you know various factors to consider before you take up an investment home loan, head over to Finserv MARKETS, where you can avail Bajaj Finserv home loans at the most competitive interest rates, with minimal documentation and flexible repayment options. So why wait? Invest in real estate today by availing investment home loans with Finserv MARKETS.

Also, read about home loans.

Finserv MARKETS, from the house of Bajaj Finserv, is an exclusive online supermarket for all your personal and financial needs. Loans, Insurance, Investment, and exclusive EMI store, all under one roof- anytime, anywhere!

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Bajaj Finserv Direct Limited ("BFDL"), erstwhile Bajaj Financial Holdings Limited is a registered corporate agent of Bajaj Allianz Life Insurance Company Limited and Bajaj Allianz General Insurance Company Limited under the IRDAI composite registration number CA0551 valid till 10-Apr-2021. BFDL also renders services to Bajaj Finance Limited (‘BFL’) and Bajaj Housing Finance Limited (‘BHFL’) (referred hereinafter as ‘Lending Partner’) in sourcing of customers, providing preliminary credit support activities, fulfilment services and post-acquisition customer services related to lending business. Registered Office: Bajaj Auto Limited Complex, Mumbai – Pune Road, Akurdi, Pune – 411 035 CIN: U65923PN2014PLC150522