Tips for buying a second property

Are you dreaming of summers at a lake-front recreation property? Or maybe you’ve always wanted to own a condo for investment purposes? Whatever your reason for wanting to purchase a second property, knowing your financing options before you buy is crucial to avoid surprises down the road.

“Financing the purchase of a second property can be complicated at first glance,” says Farhaneh Haque, regional sales manager, Mobile Mortgage Specialists with TD Canada Trust. “A team of experts such as your mortgage lender, real estate agent or builder, and insurer can take you through the process and help you decide what you can afford.” Here are three
things to consider:

01   You may be able to use the equity in your home as a down payment for your second property. Using the equity you’ve built in your existing property is one way to contribute to the minimum 25-per-cent down payment required for investment and cottage properties.

02   If you need financing, you’ll need to set up a new mortgage for your second property. As well, you must have sufficient income to carry all debts, including your primary residence. For most investment and vacation properties, financing can be provided using a standard mortgage. All of the different options and terms available when financing your primary residence are also available on your second property.

03   Insurance policies for vacation homes are “named perils” versus “comprehensive” policies. “Named perils” means you have protection for specific risks named in the policy. Other risks like water damage or vandalism can be more difficult or expensive to obtain coverage for because there isn’t someone living there year round, which increases the security risk. Insurers such as TD Insurance will work with you to determine what the best policy is for you and explain what each term means.

More information is available online at tdcanadatrust.com

Source: New Condo Guide