(NC)-Buying a vacation property is a dream that often materializes during weekend escapes to cottages of family and friends in the spring and summer months for some much needed relaxation. However, if you are planning on taking the big step to invest in a vacation or second property there are some practical things to consider to ensure it is a worthwhile investment:
1. Location and Access
It is important to do your research in order to define your requirements for an ideal vacation home. Location and access should be a key consideration. There is no point in buying a vacation home that you can rarely enjoy because it is a good 12-hour drive through unmanageable roads. Map out potential locations and visit them to ensure that they are easily accessible during the months you wish to use your home and that there are key amenities you value close at hand. It is about determining what is right for you.
2. Calculating what you can afford
There are plenty of tools online like mortgage calculators that can quickly and easily calculate approximately how much you can afford. A quick visit to your local bank branch can also give you the information and guidance you need to get started. When determining your price point don't forget to also take into consideration the ongoing costs of maintaining a vacation property, like property taxes, utility costs and general upkeep.
3. Financing your vacation property
Once you have established how much you can afford, you will need to decide how you will finance your vacation or second property. Two of the most common options available are a mortgage refinance like CIBC Home Power mortgage or a secured line of credit like a CIBC Home Power line of credit.
A mortgage refinance is an ideal way to borrow for your specific needs. It provides:
• Easily budget with a structure payment and an assured pay-off date
• Add payments to your current mortgage amount for your convenience
A secured line of credit option is a great way to borrow if you want ongoing access to funds at any time. You'll need at least some equity in your home to get it working for you and with it you can:
• Obtain a lower "secured" interest rate
• Enjoy the flexibility of paying as much or as little as you want, as long as you meet the monthly minimum payment
• Pay interest only on the amount you use.
It is also important to consider mortgage insurance for your vacation home. Mortgage insurers like Genworth Financial and CMHC (Canadian Mortgage Housing Corporation) offer borrowers mortgage financing options designed specifically for vacation properties or second homes.
A vacation property is a big investment now and for the future, so it is important to take the proper steps and considerations before you commit. Taking the time to choose what is right for you will ensure many peaceful star gazing nights. CIBC mortgages and lines of credit are subject to certain conditions and restrictions. More information is available toll-free at 1 800 465-CIBC (2422) or online at www.cibc.com.
- News Canada