Purchasing a second home can be exciting, but like any large financial venture, it comes with its potential risks if not handled right. While you may have enough money to invest in a second home, the hidden costs and details may sway your decision.
If you can afford it, you should definitely do it. There is no better time than the present to start planning your investment. However, you should make sure you get all the information you need first.
The Reasons Homeowners Consider Buying A Second Home
There are many reasons why existing homeowners may be considering buying a second home. Having a nice retreat location from the regular pressures of life can massively improve your morale. Even if you don’t use the second home very often, knowing that it’s there can help to prevent you from feeling trapped.
It may be a vacation home for the family, or maybe you want a place in the city where you can go to crash after a night on the town or a hard day at work. Perhaps you are even making an early investment for your retirement or your children’s future.
The Differences Between Your Second Home And Your First Home
Many people who invest in buying a second home may think that it’ll be easier the second time around. In actuality, the process of buying a second home will undoubtedly be much different than the first. It is important that you know all of the following information before making your decision.
Determine Why You Want A Second Home
Perhaps you have a growing family and need a second property to house everyone, or maybe you just want a place to go for a vacation – both of these reasons define the second property as a family home. This is different from an investment property, where you buy a home with the sole intention of renting it out or increasing its value to sell it later.
The main difference between these two types of homes is that you will be hoping to make money on one, but will likely lose money on the other. When determining if you can afford a second home, think about what the purpose of the property will be and how it will serve you.
Be Aware Of Tougher Financing Conditions
What many people don’t realize is that getting a second mortgage is much harder than getting your first. Banks will require you to meet tougher qualification standards. You can use the equity of your existing home to help meet those qualifications but it’s important to note that there could be risks. If something unexpected happens and you’re unable to make the payments, you could jeopardize your primary residence.
On the purchase of your first home, you may have taken advantage of government grants for first time home buyers. These may not be available to you on the purchase of your second home, so that’s something to consider as well.
Consider Your Expenses
Owning and maintaining two properties should always be thought of as double the amount of expenses. Heating, plumbing, electricity, and other essentials will ultimately be counteracted by rent if you have a tenant (though you will be responsible for total expenses if you keep it as a family home).
You may not imagine your costs to be as high for a second home if you’re not using it for large portions of the year. However, heating still needs to be turned on intermittently to avoid boiler issues, as does the plumbing to keep the water safe, and electricity has to be readily available when you use the property.
On top of this, home insurance is typically higher for unoccupied properties as issues are more likely to go unnoticed.
When Buying A Second Home, You Can Trust Davids & DeLaat!
Davids & DeLaat is an experienced team full of real estate agents in the Niagara Region who can help any type of buyer regardless of whether it’s your first home or your tenth! Contact us today to see how we can help you buy your second home.