Vacation Home Mortgages
Having a vacation home makes for a great escape. It also means needing to look into obtaining a vacation home mortgage. Working diligently year ‘round means being able to spend some time relaxing at a vacation home in the location of your choice.
What is a Vacation Home Mortgage?
This can also be known as a second home mortgage or a vacation property mortgage. It is a home loan that is used for the purpose of purchasing a second property. The best thing about vacation home mortgages is that it can be used on a property that you plan to visit throughout the year or it can be rented out as well.
The latter option provides greater financial incentive for the borrower. Being able to make money on that property and use it at their leisure is hugely beneficial. It can also take a little bit of stress out of owning that second property.
What Benefits are there to Vacation Home Mortgages?
The best thing about home vacation mortgages are that they allow borrowers to finance a property that can double as a personal investment while still having personal use. Vacation homes can add substantially to a borrower’s net worth.
It doesn’t hurt that vacation homes also provide yourself and your family a spot to vacation throughout the year. More often than not, vacation homes are located in tourist-heavy areas. This makes their values generally higher than those of traditional homes.
Best of all, vacation homes can also be used as rental properties. This allows the borrowers to find tenants that fit their needs. This can be in the form of a year-round tenant or ones for a specific length of time.
That extra income is a nice benefit as well. In addition to amplifying the borrower’s net worth, it can provide greater financial flexibility through additional income. It is a “best of both worlds” situation for borrowers.
Potential Difficulties in Obtaining
The biggest caveat to vacation home mortgages is that they can be more difficult to obtain than a traditional home loan. If you already have a mortgage on your primary property, most lenders will see a second home as a risk financially.
The difficulties in obtaining this kind of mortgage can be even more difficult. This is the case for those borrowers planning to use the vacation home as a source of generating revenue. This can also depend on the lender, so keep that in mind.
To combat the raised difficulty level, borrowers can do a few things. The first is to do all they can to show that their finances are in order. The better your financial situation, the more likely an approval comes down from the lender.
The second thing to do is to pay attention to their credit history. Keeping a diligent eye on things is essential and any errors or mistakes need to be taken care of in short order. Credit history plays an important part in obtaining a vacation home mortgage.
How to get a Vacation Home Mortgage
If you have any questions, contact Super Brokers today. Speaking with a professional about the best type of vacation home mortgages is the first step towards getting that vacation home or rental property. This can mean finding the right property as well as deciding on a home equity loan or fixed-rate mortgage to finance that property.
Whatever the case, our knowledgeable professionals can help you decide which option is the best for you. One thing to keep in mind is that mortgages need to have at least 5 percent down payment and a maximum amortization period of 25 years. The property also has to be in Canada.
Call us today for more information or to schedule a consultation with one of our mortgage experts!