The purchase of a second property is often believed to be a pie-in-the-sky pipe dream, one that is exclusively lived by the wealthiest in our communities. While it certainly does take some wise investment to make this move properly, it is not only a privilege of the wealthy to own a second home or other property. Many middle-class Canadians are taking on this endeavor so that they may invest toward their futures, both financially and to safeguard their families.
Whether you’re looking to buy a vacation home or to buy a second home to rent out as a landlord, you need to make your next move very carefully. You need to be sure that you can afford the purchase of the second property plus whatever other debts you may currently be responsible for. If you’ve found yourself in a position where you can do this, consider the five valuable tips below and visit https://askross.ca/second-mortgages-toronto-and-gta/ .
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#1: Come to Terms with the Responsibilities Early On
As a second property owner, you will be equally as responsible for the maintenance and repairs for your second property as you are for your first property. So, keep this in mind: If anything goes wrong somewhere on the second property you’ve purchased, can you reasonably afford an emergency? As a first-time home owner, you probably became acquainted with this cost as it related to your initial property. So, you should reasonably know what to expect.
#2: Decide on a Location
Many landlords, when choosing a property that they will rent out to others, choose to pick up a second property that is near enough to their current location that they can be present for maintenance and upkeep. Others, however, may have enough funds at their disposal to outsource this labor. For some, it is just a matter of personal preference and a sense of security. Don’t just arbitrarily select a location because it seems nice – it must also be practical.
#3: Become Acquainted with the Area
Are you planning to buy a second property in an area that isn’t entirely familiar to you, or even remotely familiar? This is often the case when purchasing vacation homes and cottages, but also applies in some cases of individuals trying to pick up an investment property. You don’t have to make year-round visits to the area, but it’s best to take a peek during the off-season to get a better understanding of what the calendar year looks like in this location.
#4: Speak with a Mortgage Broker
If you already selected a mortgage broker when buying your first property, you’re already off to a good start. Contact this individual or another broker, if necessary, to get their help during this process. They’ll be able to help assess your current financial situation and determine if you have any equity that can be used to help you along.
#5: Don’t Forget About Insurance
You already know the necessity of having insurance on your first property, so you can appreciate how important it is to insure the next property you’ll purchase. Unfortunately, you may find that insuring your second property can be more expensive than insuring your first property. Many insurance companies perceive second properties as a higher risk, as they do not typically have someone residing within them 24/7.
Should You Buy a Second Home?
Only you, perhaps with the help of a mortgage broker, can answer this question with any certainty. You will need to assess your finances and dig deep to understand why you have the desire to purchase a second property. This is not an investment that can be made lightly. The risk of foreclosure is just as real with a second property, after all.