With good interest rates and a market favouring buyers, now could be the perfect time to invest in a second home. Perhaps you want a vacation home that you can sneak off to every other weekend during the year, or maybe you want to collect rent on a property. Either way, no matter what your reasoning, here are some things you need to know about buying a second home.
Do your research
Don’t rush home from a great vacation and jump into buying without doing your homework first. Research the properties and area beforehand.
If it is a vacation home stop and think about the type of home that would suit your family’s needs and lifestyle. You need to consider proximity and what you plan on doing there.
Visit several times…and talk to other owners
Vacationing somewhere is not the same as owning real estate there. Check out the area when it’s off-season and talk to the people who live there about life in the neighbourhood.
Decide on the kind of home you want
A single-family home requires maintenance on a regular basis, whereas a condo requires that you pay someone else to take care of it. So depending on what your objectives are, make sure you understand the logistics of what a home requires before you make your decision.
Shop around for a mortgage
While most might naturally assume that getting a second mortgage with the same lender that gave you the first one would garner you the best deal, research has it that you should definitely shop around and see what else is out there before you commit. Talk to a mortgage broker.
Calculate the extra expenses
From insurance and maintenance to taxes and repairs, you need to factor in the additional costs of buying a second home.
Consider sharing ownership
Buying a second home on your own can be expensive, so why not consider buying it with a close friend or relative? That way you can share the costs and enjoy a vacation home for half the cost.
Take advantage of tax benefits
You don’t have to pay taxes on rent income if your home is only rented out for less than 15 days a year, but you won’t be able to deduct the rental expenses. If you rent out your home for over 15 days a year, you are obliged to report the rental income but you can then deduct expenses incurred to maintain and clean the home.
If you’re considering a second home, please contact me today!