Second Homes - Vacation Property

There are many options for consumers wishing to buy a second property for use as a recreational property, vacation home or as a second residence.

A second residence is classified as any property where the client or his/her family intends to occupy the premises on a rent free basis.

Financing a second home or recreational property is pretty straightforward. Here are some of the general guidelines.

Assuming that you will likely want to maximize the amount of financing you can get on your second home or recreational property, this may require a higher ratio mortgage.

If it is your intention to obtain mortgage financing greater than 80% of the purchase price, you will require the use of either CMHC or Genworth for mortgage insurance.

A second home is exactly that, a second home. A rental property is not considered to be a second home and would be subject to different qualification criteria.

In order to qualify as a second home under the CMHC guidelines, the property must meet the following requirements:

* The property can be located anywhere in Canada but must be suitable for, and available for year round occupancy.
* The property must be suitable for year round occupancy. Properties constructed for seasonal use, or have seasonal access are not eligible.
* Properties located on an island must have year-round bridge or ferry access.
* The property cannot be a time-share interest, life leases or be in a rental pool.

As far as income qualifications, it’s your income that is required to service the debt. CMHC Self Employed Simplified does allow consumers to have 2 properties under their program, one for primary use and the second as owner occupied as well.  Again, no rentals are allowed.

There are several other products and programs available for consumers wishing to put more than 20% down on their purchases.  Keep in mind that the process which will enable you to avoid CMHC or Genworth premiums does take a little more paper work and does require an appraisal at your expense. There are specific "types" of properties to watch out for:

• Leased Land --> most lenders do not like this, and unless it is insured, will not offer mortgage financing
• Rental Pools --> most lenders will not lend on condo units that have an optional rental pool
• Fractional Ownership --> lenders will not extend financing on Fractional Ownership; if the client goes into foreclosure, the lender cannot apply its interest on a partial title interest

For this and other Programs, call or email me for more information!