Buying a home doesn’t have to be a once-in-a-lifetime event if you’re smart about it.
Almost everyone wants to be a homeowner. They want a place they can call their own, that they can set up the way the like. While renting homes might seem appealing to some, living in someone else’s house can come with a lot of restrictions. Owning a home lets you build the life you want, the way you want it. You don’t have to compromise on anything.
Usually, buying a home is a once-in-a-lifetime event. Houses are expensive and it can take a while to pay off loans and mortgages. But what if we told you that it doesn’t have to be that way? What if we said that it’s actually very possible to buy a second property without breaking the bank?
There could be many reasons why you may want a second home—perhaps as an investment opportunity or as a holiday home. Obviously, you’ve got to think about this carefully— buying a home is a big decision. All we want to do is introduce you to the idea of it by highlighting a few points that could factor into your considerations.
If you’re thinking of buying a second home, that means you’ve already been around the block and you aren’t going into the process as a first-timer. That’s a big bonus.
Buying homes is complicated and confusing. But in your situation, you can use the lessons from your past experiences to decide exactly what you want, to know what problems could crop up and how to avoid them. The homework you did the first time in terms of property markets and future predictions will hold you in good stead for the second purchase. And you probably already have a good real estate agent. You’ll also have a good understanding of the costs and process involved—what papers you need for the mortgage application, how much contractors will cost, what home registration documents you need.
The biggest concern anyone has when thinking about buying a home is the numbers. Deposits can cost a lot—sometimes about 20% of the asking price—and you need solid finances to get a lender to support you. Things are a little easier when you’re buying a second home because chances are you can use the equity in your existing property as a deposit on the new one. The equity depends on the value of the house now as against when you bought it and how much of the mortgage has been paid off. If the second home is more expensive than the first, then you might have to add a bit to the equity to make the deposit.
Owning a second home doesn’t mean you have to still own the first one. If you’re considering putting your first property on the market, that might be a good time to look for another one. Selling the first one before getting into the process of buying another house has a few advantages. First, you won’t have to spend money on maintaining two homes. Second, you will be in a good position to negotiate prices for the second home because you will be an unconditional buyer.
Of course, if you’re looking at the second property as an investment then there’s no question of selling the first.
Buying a home, whether it’s the first or second, is usually tied to major decisions and changes in people’s lives. For some, it could be moving to a new city for a long-term job or looking for a home to start and raise a family or thinking of buying a small place in their favourite holiday getaway after a few good years of steady income and good investments. Whatever the reason may be, the property then becomes part of their futures.
Another way to look at this is to think about how a property could help you create the future you want, specifically during your retirement years. Everyone looks forward to a nice, leisurely retirement where they can indulge their passions and not have to worry about pay checks. Owning a second home can help with that. If you’re smart about it, you could rent out one of the homes and use that income to build your retirement fund.
If you have the ability to buy a second home, it’s something to consider to help set up the life you want.
Disclaimer: MoneyMagpie is not a licensed financial advisor and therefore information found here including opinions, commentary, suggestions or strategies are for informational, entertainment or educational purposes only. This should not be considered as financial advice. Anyone thinking of investing should conduct their own due diligence.