Second Home Mortgage in Winnipeg - Should You Go for It?
April 6, 2018 | Posted by: Ron Chan
Whether you have your first home paid off, or you're getting darn near close, you're now feeling pretty confident about taking the next step and securing a mortgage on a second home in the Winnipeg Manitoba area. Of course, this is a big decision that should not be taken lightly. There is a lot to consider before making the leap, which is why you've arrived here. As Winnipeg's mortgage specialist, I'm here to shed some light on why now may be the perfect time for you to buy-in to the exciting opportunity.
4 Reasons Why Now is a Great Time for You to Enter into a Second Home Mortgage in Winnipeg MB
1. You Have Equity from Your First Home to Put Towards It
Returning to the statement in the introductory paragraph, you're likely considering a second home because you have either paid off your first home or at least have significant equity built up in it. If this is the case, you are indeed prime for a second home mortgage (all else equal). That well-earned equity should be put to work, for you.
If your first home is fully paid, you're obviously in an amazing position to enter into a second home mortgage, but let's look at a scenario where which the first mortgage has not yet concluded.
You have the opportunity to take out existing equity without impacting your existing mortgage. This can be accomplished with a blend and extend strategy through the your current lender. Let’s say that you originally bought into a high-demand area in Winnipeg a few years ago, and you now have a home that is worth $600,000 with a first mortgage in the amount of $400,000 at a rate of 2.99 per cent that is set to mature two years from now. You're feeling pretty good about your initial investment and like the look of the current real estate market in Manitoba, and would now like to access some of your equity to buy another property. Let's work under the assumption that the lender’s mortgage rates today are 3.19 per cent for three-year fixed and 2.99 per cent on a five-year fixed. If your appraisal comes in at $600,000 and you qualify, the lender will give you 80 per cent of the appraised value in funds, which equates to $480,000. Since you currently have a first mortgage of $400,000 with the lender, you now have access to an additional $80,000 in funds. If your lender offers a home equity line of credit (HELOC) they can certainly give you the $80,000 in that form. However, another option could come in the form of a mortgage.
The lender can set up a separate first mortgage for $80,000 at the rate and terms you choose. If you choose the 3-year rate, your effective blended interest rate on the total funds can be calculated as such: (400,000 x 2.99% + $80,000 x 3.19%) / $480,000 = 3.02%
Look, the above examples are just that. The point is, that when you have equity in your first home, you've got options. But only a broker with vast experience in helping people get into a second home mortgage can find the solution that works best for you. If you're ready, send me an email. Otherwise, keep on reading and we can chat upon conclusion.
2. You Also Want a Vacation Home
Now that we've got some of the more 'technical' stuff out of the way, we can begin to look at your quality of life. Have you always dreamed of having a vacation property for you and your family to enjoy? Well, now that you've reached a point where a second home is no longer a lofty ambition (unless you're looking for an actual loft) you should go for it. It's one thing to consider a second home as a pure investment, but when it is something that you've always aspired to, you'll reap more than shortterm (more on this below) and longterm financial reward.
Can you picture yourself sitting on your own boat slip with toes dipped in the lake at Lac Du Bonnet, relaxing on a cottage lanai at Lester Beach, or enjoying your stay at one of the other amazing vacation home locales near Winnipeg? Then you've already answered the question as to whether or not it's time to move on the second home mortgage.
3. You Can Use it as a Source of Income
Some people already see the revenue writing on the wall when it comes to making that second home purchase. But even those of you who come packing the primary ambition of using the second home as a vacation property can make their dream deliver tangible financial dividends.
A second home that will not be occupied by your household can be used to generate longterm rental revenue. A second home that you will be occupying part-time (vacation property) can be used to generate revenue from shortterm renters, and with the feverous demand for home-sharing properties (Airbnb, etc.) a house or condo in a popular resort-type region will have little issue in generating that revenue for you. Remember, even though you may be using the space for your leisure, all four-seasons in Winnipeg draw visitors from all over the country and nearby U.S. states such as North Dakota, Montana, and Minnesota.
Simply put, your second home can not only result in significant equity gain in the future, it can drive revenue today that can be applied right back into your mortgage or other lucrative investments.
4. There Are Some Great Homes Available on the Market
At press (spring/summer 2018) there are some 'can't miss' opportunities on the Winnipeg real estate market. Whether you're looking for a traditional vacation property in areas such as Gimli, Matlock, or Lac Du Bonnet, or seeking a single detached family home or condo within communities such as St. James/CF Polo Park, Charleswood, or Westdale, there is something that will blow away your expectations. As Winnpeg's longstanding mortgage broker, I have connections with Realtors, agents, and residential developers (and of course lenders) that will afford you access to a second home tailormade for you. All that you need to do, is take the first step, and contact me today at 1-204-290-9950 or complete the form found here.