Have you ever thought of heading out to your ski condo on your favourite mountain, cottage by the lake, house where there is some of the best golfing in the world, or just somewhere you can escape to other than your home in the city? Do you have a child that is going to school away from home? How would you like to own that property and visit any time you want? Then what you are looking for is a vacation property or second home.
Now is a great time to think about a vacation or second home as you may still purchase a property with zero downpayment. Even after October 15th 2008 when a minimum 5% downpayment is required it is still considered a great time to buy for a couple of reasons. With the recent price decreases seen in the housing market and the large inventory of properties to choose from, this provides an opportunity for you to take your time and look for that dream property you are searching for.
The second home purchase program was introduced for the purpose of an individual wishing to purchase a second home in order to cut down on their commuting time or to obtain a vacation property. Also considered under the second home purchase program is the case where a mortgagor’s relative is living in the second property on a rent-free basis. As well, this program is ideal for a person wishing to provide a house for a child away at university.
Qualifying for a vacation or second home mortgage is very similar to the process of qualifying for your primary residence with the exception of a few criteria. These exceptions are as follows:
· The property must be intended for occupancy at some point during the year by the borrower; or a relative of the borrower on a rent free basis.
· The property can be located anywhere in Canada and must be suitable and available for all season access. Thus a back country cabin only accessible by foot would not be eligible for this program. Some exceptions apply.
· Properties that are constructed for seasonal use or have seasonal access only are not eligible. This means that if you have a cabin on the lake which you can only access by boat in the summertime, this cabin would be ineligible for this program. Some exceptions apply.
· The property must have a permanent foundation below the frost line; be zoned residential, rural or seasonal; include a kitchen, 3-piece bathroom, bedroom, and common area; have year-round road access; be winterized with a permanent heat source; and have a water source and septic system or sanitary sewer.
· Properties located on an island must have a year round bridge or ferry access.
· Time share interests, life leases and properties in rental pools are not eligible.
· Properties that are not winterized or have seasonal access will be considered for purchases with a minimum downpayment of 10%. In this case, the maximum loan amount will normally be $350,000.00.
· US residents may also purchase a second home or vacation property in Canada with a minimum downpayment of 35%. The applicants must be able to provide the downpayment from their own resources along with a solid credit history based on their US credit bureau.
· The applicant can only have 2 owner occupied properties under the second home program since the second home program allows you to purchase the second home with 0% downpayment. Any additional properties you wish to purchase must qualify as an investment or rental property where a minimum downpayment of 10% is required.
If you are unsure if the properties you are looking at are eligible for this program or not please feel free to contact us anytime to confirm.
In the event you may not have the ability to use the property at all times, cannot qualify for the property purchase on your own, or just feel that the payment is too high for you to afford, here are a couple of options available to you to make this dream a reality:
1. To help with the purchase of the property you may want to get a group together (maximum of 4 applicants) to make qualifying and affordability of the property easier. Also having more people involved in the property gets greater usage out of the investment
2. Another opportunity available to you is the chance of making a little income on the property. As above it states that the property must be intended for occupancy at some point during the year by the borrower; or a relative of the borrower on a rent free basis. This means that during the times that you will not be using the property you can rent it out. For example you may not be able to get out to the cottage every weekend of the year but for some weekends you may wish to rent it out. Unfortunately this income cannot be used to help qualify for the mortgage.
Remember a second home purchase can also be considered a very solid long term investment. With exception to the previous four years, the long term history of the housing market has shown that property values have increased on average 5% to 8% per year.
So what are you waiting for? Let’s make your dream a reality. If you, someone you know of or a group are interested in purchasing a vacation or second home please inquire with Betty at 403-532-3927, e-mail bsaskiw_prolink@telus.net, Kevin at 403-589-3021, kevsas@telus.net or at our website: http://www.yourmortgagecontact.com/ and apply today.
