Second Home Buying Guide :
There are three primary reasons for buying a second home:
- For investment (to earn money from rental income and an appreciation in the market value of the home),
- For short term vacation or getaways to escape the routine stressful lifestyle
- As a future retiree you secure a place where you can spend the rest of your post retirement life
There are other mixed reasons also for buying a second home. It is a pain to travel long distances to reach the work place every day. As a result, there has been a marked increase in the number of people who own a home in the city (which is near to their work place) and another one in the country (where they have their family home). Many people also prefer to buy a second home in the area where their children’s university is located. They usually buy the house in the child's name and act as a guarantor for the mortgage. By doing so, they can get a lot of tax advantages.
Second home buyers can pay for their second home in three possible ways. They can buy the home outright with cash, or use the money as collateral or deposit and apply for a second mortgage or re-mortgage the primary property. There are many banks which offer mortgages at almost the same rates as that for the primary home. Alternatively, one big property can be sold and two smaller homes can be bought with the proceeds of the sale. Another option is to rent the second home to cover the second mortgage repayments. However, if the second home is declared as a rental property, then the buyer ends up paying potentially higher mortgages.