Should you invest in a weekend home?

6 MinsMay 27, 2022

When Mumbai residents, Gopal Shetty and Sadhana paid off their home loan, they realised that they would no longer be able to claim the tax breaks associated with it. The couple then decided to buy a weekend home on the outskirts of Pune. These are the reasons why they decided to invest in a second home:

Benefits of Investing in a Second Home

Perfect weekend getaway: While their two-bedroom apartment in Mumbai was reasonably spacious, it had all the problems typical of a metro city, namely pollution and congestion. Buying a flat in a gated community in Mumbai, which would give the couple and their two small children space, was out of the question because of the costs involved.

On the other hand, the property they had zeroed in for their weekend home was away from the city, yet not too far to be inaccessible. It has a swimming pool and open spaces and it was something that the couple could afford. This way, the family could spend quality time every weekend, and the kids would have space to run around.

Capital appreciation: Since the property was only about 40 km from Pune, it was likely that the property prices will increase. This means the price of their weekend home could rise over the years.

Cheapest loan to build a long-term asset: Home loan interest rates are at a historic low. The couple could get a home loan in the 6.5 – 7.5% interest bracket, given their incomes and credit history. This is the cheapest debt available to build a long-term asset.

Tax breaks: With their old home loan paid off, the couple could no longer avail of the associated tax break. However, if they took a new home loan to buy a weekend home, they could continue to get a tax break up to Rs. 2 lakh of interest paid per year under Section 24 (B)

Regular income: If they decided to rent out the property, it could offer them a regular income, that will supplement their existing family income.

[Also Read: What Type of Home Loan is the Best one for You?]

Retirement home: The weekend home could serve as Gopal and Sadhana’s retirement home in about 15 years. They could encash their Mumbai property, which is bound to appreciate significantly, invest the proceeds wisely and then pursue whatever interests they want to without worrying about money.

Whether it is a home loan for your first home or your weekend home, Axis Bank offers a range of home loans and top-up home loans tailored to meet your needs. To know more, click here. You can use the home loan EMI calculator and know more about home loan eligibility online.

Disclaimer: The Source, a content creation and curation firm, has authored this article. Axis Bank does not influence the views of the author in any way. Axis Bank and The Source shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information. Please consult your financial advisor before making any financial decision. Names mentioned in this article are fictitious in nature and only for explanatory purposes.