Becoming a homeowner is a significant achievement, especially in cities where property prices are high. Some people take out a home loan because it’s a necessity, while others invest in their future by planning ahead. Whatever the reason may be, people often consider applying for another home loan after they have taken out the first one.
The answer to the question of whether you can take out two home loans at the same time is yes. You can own multiple properties and apply for a loan for each one. However, whether or not you are approved will depend on your income and ability to repay the debt. You can take out the loans from the same lender or explore other options, and you also have the option to refinance the loans.
The loan can be used to purchase properties in the same city or in another city, but the amount available will vary depending on the location of the property. Getting approved for a second loan may require a more detailed analysis of your repayment ability. It’s important to consider whether you can afford the monthly payments for two loans, along with your other expenses, without putting too much strain on your current financial situation. While taking out two home loans may come with its own set of challenges, there are also multiple benefits to owning multiple properties.
Can I have multiple home loans(more than 2 home loans) in India?
When it comes to home loans, there is no limit to the number you can have as long as you meet the lender’s eligibility criteria. A lender will look at factors like your income, credit score, debt-to-income ratio, and repayment history before approving a loan. A higher credit score (usually around 750) and a low debt-to-income ratio can improve your chances of being approved for multiple loans.
It’s important to keep in mind that having multiple home loans means having multiple EMIs to pay every month, which can be a financial burden. Before applying for a second home loan, you should carefully consider your financial situation and ensure that you will be able to repay both loans on time. If you don’t qualify for the loan amount you want, you could consider applying for a joint loan with a co-borrower who has a stable income.
When you apply for a second or third home loan, the lender will assess your ability to repay both loans on time. The bank will also check your credit report through credit information agencies like CIBIL, so it’s important to be transparent about your financial situation.
In conclusion, while it’s possible to have multiple home loans in India, it’s important to carefully consider your financial situation and ensure that you will be able to repay the loans on time. If you have any questions or concerns, it’s always a good idea to talk to your lender or a financial advisor for guidance.
If you're considering taking out multiple home loans in India, here are a few additional things to keep in mind:
- Eligibility: Before you can receive the loan, your lender will carefully evaluate your eligibility and repayment capacity. To have a good chance of being approved for multiple loans, it’s important to have a strong credit score (typically around 750) and a healthy debt-to-income ratio. If you have a good financial history and steady income, you may be able to get approval for multiple home loans.
- Loan amount: The bank will assess your ability to repay both loans on time before granting the loan. It’s always a good idea to inform your home loan lender about any existing liabilities you have, even if it may lower your loan eligibility. If you don’t qualify for the loan amount you want, you could consider applying for a joint loan with a co-borrower who has a stable income, such as your spouse or parents.
- Tax benefits: By taking out a home loan for multiple properties, you may be eligible for tax benefits on the interest paid on the loan and the principal amount used for registration and stamp duty. For example, you may be able to claim exemption from interest under Section 24B for up to 2 Lakhs per year, subject to certain conditions. However, it’s important to keep in mind that these tax benefits may be limited, and you should always consult a tax professional before making any claims.
- Repayment: When taking out multiple home loans, it’s important to make sure that you are able to repay all of the loans on time. This will help you avoid late fees and other penalties, and maintain a good credit history.
- Top-up loans: If you already have a home loan and need additional funds for repairs or renovations, you may be able to take out a top-up loan. This is essentially an additional loan that is added to your existing home loan, and can be a convenient way to access additional funds without having to take out a separate loan.
Overall, having multiple home loans can be a good way to purchase multiple properties and enjoy tax benefits, but it’s important to carefully consider your financial situation and make sure that you are able to repay all of the loans on time.
What are the Tax Benefits of Having Multiple Properties in India?
Owning multiple properties has several advantages, two of which are related to taxes. Let’s take a closer look at these benefits:
- Tax Benefits on Interest Payment : When you borrow money to buy, repair, or build a property, you may be eligible for a tax break on the interest you pay. The amount you can deduct depends on several factors, but for a single residential property, you could potentially save up to 2 Lakhs in taxes on interest every year.
However, if you own multiple properties, you can only claim this deduction for one of them that you consider your primary residence. The others are assumed to be rental properties and don’t qualify.This tax advantage applies to both residential and commercial properties and doesn’t matter who you borrow from, whether it’s a bank, housing company, or even a friend or relative. If you took out a loan for a property under construction, you can also claim a refund on the interest you paid until the house was ready for you to move in. This refund is usually paid in five equal instalments.
Let’s take an example to understand this better – If you took a loan of Rs 20 Lakhs to buy a property, and the interest rate is 8% p.a, then you would pay an interest of Rs 8 Lakhs every year. If you are eligible to claim a tax exemption on this interest payment, then you could potentially save up to 2 Lakhs in taxes. Tax Benefits on Repayment of Principal Amount : Under Section 80C, you can claim a tax benefit of up to 1.5 Lakhs for the expenses you incurred for registering, stamp duty, and other formalities. However, this benefit is only available through certain institutions. Even if you have multiple home loans, the maximum tax benefit you can claim for the expenses related to these loans is still 1.5 Lakhs.
This benefit is only available once you have taken possession of the property and have not started repaying the principal amount to the lender. You cannot claim this benefit if you borrowed the money from a family member. On the other hand, you do get tax benefits for other savings schemes such as provident fund, life insurance, PPF, NSC, ELSS, etc.
For instance, if you incurred expenses of Rs 1 Lakh for registering and stamp duty on a property you bought, you could claim a tax benefit of up to 1.5 Lakhs on this amount.In conclusion, owning multiple properties can provide tax benefits, such as those related to interest payment and repayment of the principal amount. While the tax exemption on interest payment is only available for one self-occupied property, the tax advantage on repayment of the principal amount is capped at 1.5 Lakhs. Additionally, you can take multiple loans for the same property, such as a top-up loan, to meet various financial needs.
Can I get a bank loan if my employer pays my salary in cash?
Getting a loan may be difficult if you receive your salary in cash, as banks typically need proof of income to approve a loan. This proof can include records of professional tax or provident fund payments, regular salary deposits into your bank account, or salary slips showing your monthly earnings. However, it’s not impossible to get a loan if you receive your salary in cash, but it may require some additional effort on your part to find a lender who is willing to work with you.