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I am a homeowner, and would like to purchase a vacation/secondary
home. What are my financing options?
By Triston Rans of The Mortgage Group
Taking on a second mortgage is not a step most homeowners take lightly.
But with more and more people seeking second properties, the market has
expanded in recent years, and it is now easier than ever. Even 100 percent
financing on a second home or recreational property in Canada is now an
option!
Canadian mortgage insurers (CMHC, Genworth, AIG) have become less
conservative in their practices as competition has increased. The use of an
insurer will be required if you wish to obtain mortgage financing greater
than 80 percent of the purchase price. In some cases, if the property is in
a remote location, mortgage insurance may be required regardless of the size
of your down payment.
In order for a property to qualify as a second home, it must be the
intention that the property be occupied at some point during the year by
either the borrower or a relative of the borrower on a rent free basis. As
well, the property must meet the following requirements:
- The property can be located anywhere in Canada but must be suitable and
available for year round occupancy. Properties constructed for seasonal use
or have only seasonal access are not eligible.
- Properties located on an island must have year-round bridge or ferry
access.
- The property cannot be a time-share interest, life leases or be in a
rental pool.
As with all purchase transactions, your credit rating is key and your income
must be sufficient to service all debt. This includes all expenses
associated with your primary residence and any other consumer debt. Any
rental income that the property may generate can not be considered.
It is important to keep in mind that buying property in another province
will involve using that provinces realtors, lawyers and home inspectors.
There may be differences in that province’s law for purchasing property than
that of your current residence.
As a prospective buyer, you might find it easier to start the process by
asking for recommendations from trusted sources, such as your Mortgage
Specialist. Most are able to assist you with all purchase transactions in
Canada, regardless of the province their license is held.
For more advice on your personal mortgage needs, please contact Triston
Rans, at The Mortgage Group, at 571.8142 ext. 237, email
tristonrans@mortgagegroup.ca
or visit
www.tristonrans.ca
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