Having a second property can look different depending on your stage of life. Some people choose to purchase a cabin or summer home. Others, who are usually more advanced in years, may choose to purchase a timeshare or second property somewhere warm for the winter. Still others might choose to purchase a second property to rent out for extra income.

There are some important questions you will want to ask yourself before you decide to purchase a second property, such as, “can we afford a second mortgage?” or, if the Saskatoon property is a rental space “am I ready to deal with potentially difficult tenants?” It is important to seriously consider the financial cost before purchasing a second property to make sure that it won’t add financial strain to your life.

Another important thing to consider is what type of second property you will purchase. A holiday home and a rental property have different value for mortgages and other financing options. Knowing what you want to buy is an important step in figuring out whether or not you can afford to purchase a second property.

The other important factor is looking into the various financing options such as HELOCs, home equity loans and conventional mortgages. Talking with a financial advisor can help to shed some light on what the best financing options before you start to browse.

If you are ready to purchase a second property, or a first property, come talk to us at North Ridge Realty. Our realtors would be happy to help you find the perfect new home in Saskatoon!

One of the biggest questions you will ask yourself when deciding to purchase a new home in Saskatoon is “how am I/how are we going to pay for it?” Currently, there are two main options for paying for your home (assuming that you do not have the savings to pay for the whole home outright). These options are a conventional mortgage or a home equity line of credit (HELOC). Here are some differences between the two financing options:

1. Mortgages are structured – Typically, a mortgage has a fixed time period (amortization), fixed payments, and in some cases a fixed interest rate. HELOCs on the other hand are entirely open. Interest rates with a HELOC fluctuate with the prime rate, there is no fixed time period, and no set payments which can be a great option if you want flexibility.
2. HELOCs can be re-borrowed – A HELOC allows you to take money out of the line of credit multiple times, which offers the ability to borrow against the HELOC for home renovations, emergencies, or the down payment on a second property. Mortgages are a one-time loan that cannot be re-borrowed (unless a second mortgage is taken out).
3. Mortgages are stickier – With conventional mortgages, there are penalties for paying it off early or for paying more annually than a set percentage of the mortgage (usually 20%). With a HELOC, you can pay off the loan as quick as you want and there are no limits to how much you pay at a time, however, if you miss payments on either structure there may be repercussions.

If you’re looking at purchasing a new home soon, talk to your banking institution about your financing options and then come talk to us.