Dreaming of owning a place to escape to on weekends or summer breaks? A vacation home can be an amazing investment in your lifestyle—but there are some important things to think through before jumping in.
Start with Your Long-Term Plans
Before anything else, take a look at your 5- and 10-year goals.
- Will you actually use the home enough to make it worthwhile?
- Are there other financial goals (like retirement, kids’ education, or a primary home upgrade) that take priority?
- What’s the opportunity cost of tying up your money in a second property?
Financing the Purchase
If you’re not planning to buy the vacation home with cash, your next step is to map out the financing. Here are a few key questions:
- Do you have a down payment saved? Depending on the property, you may need anywhere from 5% to 20% or more. For example, a property that isn’t winterized or is more remote could require a higher down payment.
- Can your income support the new mortgage? You’ll need to consider your current debt levels and calculate your debt servicing ratios. Banks typically use 39% for Gross Debt Service (GDS) and 44% for Total Debt Service (TDS) as upper limits.
- Is the property eligible for financing? Not all vacation properties qualify for traditional financing. Remote areas or properties outside Canada may require alternative solutions.
- Will it be a personal getaway or an income property? If you plan to rent it out, different mortgage rules and tax implications will apply.
Choosing the Right Location
Once you’re confident the numbers work, the fun part begins—picking the location! Think about:
- Future development in the area
- Access to municipal services (like water, waste, and emergency services)
- How easy it is to get there, especially in winter
- Long-term property value and appreciation
- Whether seasonal access might be an issue
Managing It When You’re Not There
What will happen to the home when you’re not using it? Will you rent it out short-term? Hire a property manager? Make sure you’re also aware of what’s required to maintain insurance coverage when a home is vacant for long stretches.
Need a Hand? Let’s Talk.
If you’re not sure where to start—or want help figuring out your budget and financing options—let’s connect. As your mortgage agent, I can help calculate your debt servicing, walk you through the approval process.
Let’s make that dream vacation home a reality—on your terms.