Can I Avail Two Home Loans at the Same Time?

Becoming a Home-owner is a matter of pride, especially in metro cities where property rates are very high. Taking a Home Loan is a necessity for some, while some people plan their future and invest accordingly. The reasons might be different, but people do consider applying for another Home Loan after availing of the benefits of one. First-time buyers have a different mindset but those who know the benefits of availing a Home Loan, are open to exploring it further. A general question that crops up is – can I avail two Home Loans at the same time? Well, the answer is in the affirmative. Yes, you can own multiple properties and more than one house. However, it depends directly on your income and the probability of paying off the debt. You can take the credit from the same finance company or bank or may explore other avenues. Moreover, of course, the option of getting the loan refinanced is always open.

The loan facility is applicable for properties in the same city as well as another city; it is available irrespective of the location of the house, though the agricultural land does not qualify for a housing loan and the amount varies from area to area. It follows just like the first loan; the only difference is that the repayment calibre of the borrower is critically analysed.  There are many questions in people’s minds when they think of taking a second loan. EMIs (Equated Monthly Instalments)for two loans and other routine expenses should not overburden his present; planning for the future should not be done at the cost of the present. However, one must keep a note of the fact that there are multiple benefits to having multiple properties. Some of these are mentioned below:

1. Tax Benefits on interest payment

A loan taken for buying, repairing or constructing a house makes you eligible for claim exemption from interest under Section 24B. The amount of interest that you might get exempted for, is a variable. For one residential property, you can avail interest benefits of up to 2 Lakhs every year (depending on various factors). The amount you paid as EMI which includes the interest will be submitted by you every month, but you can claim relaxation on interest. However, in the case of multiple properties, you can claim a rebate only for one property which you will mention as self-occupied. As per the law, the second property is assumed to be given over for rent and thus does not qualify for any deduction in interest. You can claim repayment of interest for one property, while for others you will have to pay the respective tax.

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This deduction in tax applies to property for residential as well as commercial purposes. Also, the loan need not be taken primarily from a bank or a housing company, even if your friends or relatives offered you credit, you could still apply for this rebate. If you took a loan for a flat which is under construction, you could claim a refund of the interest paid till the house was ready for possession. This refund is generally made in five equal instalments; however, there is an upper bar for the same, and the amount can be carried off to next year.

2. On Repayment of Principal Amount

Section 80C suggests that the borrower can make a claim of up to 1.5 Lakhs for the amount he used for registration, stamp duty, and other formalities. This feature is offered, however, only by specified institutions. You may apply for more than one Home Loan, and the amount you spend on legalities may go up, but you are eligible just for a maximum rebate of 1.5 Lakhs. However, you can avail of this benefit only after the house is under your possession, and you have not yet initiated the payment of the principal amount to the lender. Unlike the deduction you could claim in interest for a loan that you took from a family member; for the principal amount, you cannot make such a claim. Although you do get tax benefits for provident fund, life insurance, PPF, NSC, ELSS and other schemes.

So far, we discussed the possibility and benefits of a loan for more than one property. You can also apply for a loan for the same property. For instance, you are repaying a housing loan for a tenure of 20 years, in the meanwhile, you need to repair the existing structure or build one at the top of it. You don’t need to spend your savings on that. Go to your bank and ask for a top-up on your Home Loan. Top-up does not mean you can avail of two Home Loans on the same property but in a way, you are taking multiple loans for the same. Gone are those days when the possibilities were few and restrictions many. Now, you have much freedom in choosing which type of loan serves your purpose.