More Canadians than ever are purchasing second homes. No longer just for the wealthy, second-home ownership has gone mainstream. For many Canadians, it’s the dream of a summer cottage, golf retreat or a winter chalet. For others, career or family demands fuel the desire for a second home: for business stays or to shelter the university student studying in a distant community.
When the “Second Home” Program was introduced – helping Canadians borrow up to 95 per cent of the home’s value – the purchase of a second home became easier than ever. The attraction of this real estate investment is just as compelling with your second home, as it is with your first.
There are a few provisions here: either the borrower must occupy the property for at least some part of the year or a family member must occupy the property on a rent-free basis. The property must be winterized and be accessible for year-round occupancy.
Below are some questions to keep in mind when you finance a second home.
What are your financing options?
The Second Home Program has been a big breakthrough for Canadian second-home buyers. Genworth or Canada Guarantee will insure a property purchased for a family member attending post-secondary away from home. The program is also very popular as a means of purchasing a vacation property, however it must be located in Canada.
A line of credit for a second home?
A line of credit is the most common way to use your home equity. No need to wait until you’ve saved a down payment for a second-home investment, but you must have the funds and cash flow to comfortably make both mortgage payments.
It’s your second home?
This means that it’s primarily for your own or your family’s use. If you’re looking to purchase an investment property, your mortgage professional can help with that too … but it’s not the same as purchasing a second home.
If there’s a family cottage in your dreams or a student condo in your plans, this is the time to get serious about a mortgage plan to make it happen. Be sure to check out your options.
Sherry Jenkins with Axiom Mortgage Solutions is the licensed mortgage professional and founder of We Mortgage Team