More Canadians purchasing second homes

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 Canada Mortgage and Housing Corporation (CMHC)
introduced a Second Home Program – helping Canadians
borrow up to 95% of the home’s value – the purchase of a
second home is easier than ever. And, the attraction of this
real estate investment is just as compelling with your second
home, as it is with your first. Not only can it be a good financial
investment, but it’s an important emotional investment too.
Below are some questions to keep in mind when you finance
a second home.

Can you afford it? This is the most important question you
have to ask yourself. If you are planning to purchase a
second home, you’ll want the best possible financing for your
new real estate investment. There’s no question that financing
is easier than ever. But a mortgage professional can help you
figure out exactly how much second home you can comfortably
afford. It’s a great time to begin that conversation – and
mortgage interest rates are still at a near all-time historical low.

What are your financing options? The CMHC Second
Home Program has been a big breakthrough for Canadian
second-home buyers. CMHC will insure a property purchased
for a family member attending college or university away
from home. And the program is very popular as a means of
purchasing a vacation property. There are a few provisons
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.
And, it must be located in Canada. Be careful with island
properties; they should have year-round bridge or ferry
access. Note, too, the Second Home Program can’t be
used to purchase time-shares or similar rental pools.

What do the mortgages look like? By far, your best bet
is to talk to a mortgage professional with access to a wide
range of lenders. The mortgages for second homes can
vary widely in the rates and requirements.

Can I leverage my existing equity in my primary home?
This is an option that your mortgage professional can help
you look at. This involves a cash-out refinancing of your existing
primary home mortgage, with a higher borrowed amount.
Instead of waiting and saving years for a second home, you
can access money based on the value of your primary
residence and your present financial profile to help you
finance a second property.

A second mortgage for a second home? Is this the right
option for you? A second mortgage 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. Your mortgage professional will work out
the best terms for you.

It’s your second home. This means that it’s primarily for
your own or your family’s use (although you may rent it out
casually and temporarily). 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. Speak with me today to check out
your options.