Buying Second Home

The demand for second homes is growing exponentially because of population growth through immigration, aging parents, children going to university, work from home, or longer commute time for work.

You can purchase a second home with as little as 5% down.

You could either finance your second home purchase using your savings or get a mortgage against your home’s equity. You have a few flexible options for a down payment. The most popular option is to refinance your current mortgage. This implies a re-evaluation of your home and then establishing a new mortgage based on your property’s value.

Your existing home must have built equity over the past few years (given that you have been living in the house for a while). If that’s the case, you can use the equity on your current property for financing your second home. The only problem with this method is that the principal amount and interest on your current mortgage will increase since you are refinancing the mortgage at a higher amount.

Another way to get your home equity is by using the Home Equity Line of Credit (HELOC). You can obtain a loan by putting your first property as collateral. It gives you an opportunity to use as much money on your equity as you need.

Remember: In Canada, you are able to borrow up to 65% of your home’s value using HELOC. However, keep in mind, your HELOC balance AND current outstanding mortgage cannot exceed 80% of your home’s value when added together.