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Insurance Article

Should You Plan For A Second Home?

August 17 2015

Invest your savings wisely

A lakeside view for retirement homes

A lakeside view for retirement homes

Is second home a financial burden

Is second home a financial burden?

 

Vrushali Deshpande and her husband Mukund have a comfortable home in Mumbai, and last month they invested in another flat at Kolhapur. It is a three-bedroom flat, which boasts of all modern amenities and is close to Kolhapur's famous temple. It provides them with a holiday home where they can enjoy the laidback, calm environs, and reside close to their friends and family. They are also considering leasing the apartment when they do not occupy it.

Several couples living in metro cities are considering the option of a second home in tier two and tier three cities. But along with these benefits, come the concerns about investing into another property. If you are thinking whether investing in a second home is a good option, we present the following pros and cons for you to consider.

Pros

Vacation home

The space and peace of a vacation home offers you freedom to relax. The prospect of having a home near a beach, hills or a lake is extremely alluring. A vacation home offers open spaces, something that both adults as well as children cherish.

Retirement plans

Various upcoming as well as established Vacation Homes projects are located near lakes and hills. If you dream of living in an idyllic spot, then investing in a second home could be a sound decision. Planning a Vacation Home before you retire can ease your budget restrictions. One can also think of shifting to these homes permanently.

Returns from the second home

Many investors also feel like their second home should ideally pay for itself through rent. If rented, the second home can generate an additional income for homebuyers. Owners can choose to rent their second home on short term as well as long term basis.

Cons

Financial liability

If you already pay regularly (rent or EMI) to live in your first home, investing in a second home can cause a strain on your finances. In case you do not manage to lease it, it might take a toll on your savings.

Loss of interest

Lack of time can keep you away from your second home for long periods of time. Grown-up children, ill health or job relocation can all lead you away from your second home in the long run.

Maintenance costs

Maintaining a property away from your city of residence can be taxing. A second home will require minimal furniture and upkeep, regardless of whether it is leased or not. Apart from these costs, you will have to pay property taxes or maintenance taxes on the second home too.

The idea of a second home in peaceful towns and living closer to your loved ones seems like a dream. However, smart planning and careful execution is essential to turn this dream into reality.


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