Buying a second home is a huge milestone. Whether you have your first one paid-off, or you’re near the end of its term, you’re feeling confident and ready to take the next step on your next property in the Penticton BC area. With significant equity built up in its predecessor the process is can be less challenging (when working with us) and the prospect is quite exciting.
What Are the Motivations for Getting a Second Home and Mortgage?
There are a number of worthy motivations for buying a second property. The following are common incentives that may apply to your particular goals:
- You want a vacation home
- You want to use it to earn income on the short term rental market (Airbnb, VRBO, etc.)
- You want to use it to earn income on the longterm rental market
- You’re using it as a pure residential real estate investment
- You plan on using it as a future retirement property (or empty nester oasis!)
- All of the above – it’s all possible!
Why You Need a Broker for a Second Home Mortgage Too
You’ve experienced the benefits of using a mortgage broker when you purchased your first home. But do you still need broker services for round two? Absolutely.
You don’t want to blindly approach lenders, giving up too much of the equity in your current property as collateral. It may be tempting to take that lower downpayment requirement of just 5% (with an insured default program) but you may be better off putting down 10, 15, or 20%. Under the latter scenario buyers typically refinance their existing home to access a larger amount for a downpayment, if they don’t already have the cash reserves. In some cases a buyer may even refinance the existing home in order to pay cash (the whole enchilada) for a second residence, especially when there is a great opportunity to snatch up a desirable property for cheap (i.e. foreclosure, etc.). A broker will analyze all scenarios and go over your options so that you make the most educated choice – for YOU. And as always, a reputable broker will get you access to the best possible fixed and variable rates.