Buying A Second Home

What You Need To Know When Buying A Second Home

Buying a second home or recreational home has long been an aspiration for Torontonians. Whether that be a cottage in Muskoka, a Chalet near Blue Mountain, a country home in Caledon…you get the point. It’s available to fortunate people who have accumulated enough equity and wealth to have more than one property. As we saw during the COVID-19 pandemic, there has been a huge shift for people living in Toronto’s downtown core looking to escape to more open spaces outside of our city. Rural, cottage and country homes are all desirable these days. In fact, we see many bidding wars outside of Toronto! With this shift in ownership, there has been a huge boom in sales and prices as far out as a 3 to 4 hours drive from the city. We dive into some key factors that you should be aware of when buying a second home.

Financing

Buying a second home is a commitment beyond your time. The financial implications are important to consider deeply. Speaking to your bank or mortgage broker is the first step towards clarifying how much you can afford to spend. Also, are the funds to purchase the second home being accessed from a Home Equity Line of Credit (HELOC) – in other words, accessing the equity grown in your primary residence to fund the second home. Alternatively, do you have the funds in equity stocks or cash? Once you have a clear understanding of what financing looks like, you can begin to set your focuses on where and what you can buy!

Dreaming of a custom-designed home on a lovely plot of vacant land? Note that many clients think they can buy vacant land with the same principles of primary housing financing. This is not accurate; if there is no physical structure and utilities servicing the land, the bank will require a much larger downpayment, in many cases 40% or more of the vacant land value.

Essential Tips Before Buying A Cottage Or Rural Property

Lifestyle

Daydreaming about where you most want to spend your recreational time, whether that is on weekends, holidays or through the summer, is wonderful! The lifestyle you want is the key driver here! We all have fantasized about a cozy retreat or a place to gather with friends far from the hustle and bustle of Toronto. When we open a design magazine, we are transported off to fantasy land. It doesn’t need to be a fantasy; you can make this dream a reality with work and effort!

It is also important that you be practical and pragmatic as well. Not to pour water on your dreams! Not at all! However, there are a lot of responsibilities that newcomers to secondary homes overlook. How far is the drive? How would Toronto traffic affect this drive? How often will you utilize the locale? What are the maintenance and upkeep costs? Docks and decks can get expensive, so can septic tanks! Rural? Cottage? Chalet? Country home? Many cottage owners love their time at the cottage while also realizing that work needs to be completed each weekend, whether raking leaves, moving rocks, cleaning boats, etc.

When some owners step back, they realize that the cottage season is really two and a half months of the summer. When you factor in black fly and deerfly season and the cooler nights come September. Will you still love driving up on a Friday and returning on a Sunday night for what could amass to a total of 10 weekends or 20-30 days a year? Alternatively, would a year-round vacation home be a more fitting lifestyle decision for you? There are myriad factors to weigh as you buy a second home—all worthwhile and valid to consider to make a wise, educated decision.

Get Started On The Right Foot Now

The Right Advice

You want to make a great decision, one that you are proud of for years to come. Not a long-time stressor. To buy a second home without a sense of regret, it is paramount to speak with a fantastic realtor who can bounce ideas off. A real estate agent who will point you in the right direction with professional, fair and genuine real estate advice. The last thing you want is to end up with swampland or overpay inadvertently! We have many contacts throughout North America should you like a helpful referral to a professional real estate agent!

Bonus: Buying A Second Home For A Child

Buying a second home for a child is a newer topic. As the Bank of Mom & Dad has become more wealthy thanks to the Toronto real estate investments, it’s no wonder that we are beginning to see more parents buying a home for their child. Whether that be a condo or a house in Toronto, this is a strong attempt to hedge their child’s real estate future. It looks more and more likely that homeownership will be harder for the young generation if they do not already own real estate in Toronto. Yes, this is certainly not an option for many, but those fortunate enough are being given a generous boost into the real estate market.