Do You Qualify for a Second Mortgage?
In addition to confirming that you do in fact have the means to take on another monthly mortgage payment, you will have to analyze the loan for your first residence.
If the value of your current property has adequately increased, banks will have no problem financing your second purchase. It is, moreover, recommended that you obtain a preapproved mortgage, even if you are already a real estate owner.
By proceeding in this manner, you will know both your first property’s net value and have a better idea of how much you can budget for your second residence. Remember as well that a down payment equivalent to 20% of the desired property’s value is recommended, and even mandatory for an income property.
Is This Really a Good Idea?
You should think carefully about if this is really the right choice for you. During the pandemic, many households sought to swap the city for the country to gain more living space and to take advantage of the opportunity to work from home. However, is this the lifestyle you want long-term? You may think you are getting the best of both worlds by keeping your downtown residence and having a getaway surrounded by nature. Nevertheless, when life really gets back to normal, will you truly have time to enjoy your secondary residence to its fullest? The purchase of a second home must be thought of as a long-term commitment.
It would therefore be wise to select a property that is located at a convenient distance for regular weekend visits and for easy maintenance. This is valuable advice, especially if you decide to rent the property out to weekday travellers to maximize this investment’s profitability.
Finally, make sure this cottage or holiday home fits your tastes and requirements all year long. For example, does the area offer fun activities both in summer and winter? Is the dwelling well insulated and comfortable when the weather turns cold? Is the decor in a style to your liking so that you enjoy spending time there? Does the property require renovations, and can you afford to carry them out?