Wouldn’t it be nice to actually enjoy the sunshine away from the city in your own private sanctuary? It may be easier than you think.
Can I get a mortgage for a second home?
What many don’t know is that you can get a second home with only 5% down, which means a mortgage of up to 95%. A second home is a weekend getaway home, or a cottage with year-round access that you, or family members occupying. It could also be a property in which you spend half of your time. For example if you work in a different city than your principal residence, you can get a home in the city that you work as it would be considered a second home. If the property is an income producing property (ie. you are collecting rent) it would NOT be considered a second home.
Insured Mortgages for Second Homes & New Changes
Of course, with only 5% down, your mortgage needs to be insured. Just over a week ago, CMHC announced that effective May 30th, 2014 they would no longer insure second homes or provide insurance for those applying under the stated income program. Deadline to submit an application for a mortgage that is insured for both stated income or second homes is May 29th, though some lenders will have their own earlier deadline.
What about Genworth & Canada Guaranty?
Good news is that there are two other private insurers who are still insuring second homes and stated income program. Genworth & Canada Guaranty kept their programs but limited the number of units for the second homes to one. Changes will be effective May 30, 2014.
How do I qualify?
The idea of a second home grabbed your attention and you just can’t wait to escape to your lake front property, urban condo, or wood cabin. What’s next, how do you qualify for a mortgage for a second home?
The qualification is essentially the same for obtaining a mortgage for a primary residence or a second home. Lenders will look at your income and current debt. If you already own property, they will look at how your current income is servicing your current debt. If you have rental properties and claiming rent, proof of rental income via a T1 general and/or rental agreements will also be required.
Key thing is to remember your budget and stay within it. Don’t over leverage yourself if you know a second home would not be within your budget.
