Buying a second home can seem out of reach. However, with the right plan a dream can quickly become a reality. This blog will serve as an oversight towards the initial steps in saving for a second home, as well as, offer resources which will assist you in both consideration and execution during your process.
The first step in your purchasing decision should not be choosing a dream cottage. Rather, the first step should be a time frame you wish to give yourself in the pursuit purchasing and/or shifting into a more recreational lifestyle. This is viewed as “the parameter of the game” and will serve as the foundation for your savings plan. Without a timeline which is both realistic and comfortable for your particular situation, saving for a dream cottage can become stressful, or slowly neglected over time.
The second step in saving for a major asset, such as a second home, is a personal financial assessment. This step can be done individually, however, we suggest seeking professional guidance. Often initial consultations are free. Equally, financial assessments can be done through your personal bank CAREER. You can find further initial information of second home purchasing through TD Bank or ATB. All banks will work with you towards your dream cottage.
A special note: if your timeline in step one includes the purchase of land only, and building later, there is a difference between banks, leaders, and other streams of financing for this particular type of investment. Our CottageClub team specializes in CottageClub products thus if you are interested in a land-only purchase at CottageClub, we suggest speaking with a team member, who will be able to offer personalized suggestions for your financing options.
The last step is finding a cottage which is achievable within the parameters set by the above two goals. We understand, for many, the goal of purchasing a cottage is to set a foundation, both literally and figuratively, for family and friends to gather and enjoy. However, your Forever Cottage does not have to be your first Cottage. A starter cottage can serve as an appreciating investment towards your Forever Cottage. The investment in a starter cottage is dually a product of appreciation and equity, but also a foothold for you and your family’s entrance into recreational living.
For those further interested, explore this link for basic tax differences between primary estates, rental properties, and secondary estates.