Things To Consider Before Buying A Second Home

With the prices of homes falling and mortgage rates at historic lows in North America, you may be taken with the idea of purchasing a second home.

The question is: will the investment be worth it in the long run?

Before you rush out to property viewings and open houses, give some serious consideration as to what your purchase will entail.

Here are some important considerations to help you weigh your decision:

 1.  Consider Your Needs

Are you looking for a weekend getaway or a place where you can spend a lot of time post-retirement? Will you be accommodating a large family at your new home or just yourself and your partner? Taking your long-term needs into consideration will help you narrow down your search.

For example, if you’re looking for a weekend getaway, you should choose a home in a scenic setting that is only a few hours from where you currently live. If you’re looking for someplace to live part of the year post-retirement, make sure that health care services and other facilities—such as grocery stores—are within easy reach of your new home.

No matter where you decide to buy, try to talk with other homeowners in the area to get a clear picture of what life is like there—including any problems that might present themselves.

 2.  Factor In Additional Expenses

Up keep is a major consideration in the purchase of your second home, especially since you won’t be spending the majority of your days there.

Consider that you may have to make additional trips throughout the year to perform maintenance, or pay someone else to do it. For this reason, factor in about 2 percent of your home’s value for upkeep expenses each year. And don’t forget about insurance: your home might be located in an area that’s vulnerable to hurricanes, earthquakes, floods, or fires. It’s better to be safe than sorry.

 3.  Shop Around For A Mortgage

In order to get the best deal on your new home, do some extensive comparison shopping before signing your name to a mortgage. Remember that low interest rates will help you pay down the principle of your mortgage faster so you can start clearing your debt.

Five-year fixed mortgages are particularly hot right now, as they offer low rates and give you the additional benefit of being able to increase your regular payments or apply a lump sum payment to your annual balance.

 4.  Consider  fractional  Ownership Or Renting

Once you tally up the expenses of a second home, you may find that it’s not quite the steal you thought it was. If you’re still interested in buying a second home, consider sharing ownership with family, friends, or co-workers.

You may also consider renting out your second home in your periods of absence to make some money on the investment. If you choose this route, make sure to draw up formal contracts and have a good insurance plan in case of disputes or damages.

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