A growing number of Canadians are buying a second a home. Given the current state of affairs at the global level, many people who live in the city are dreaming of getting away from it all in a more peaceful setting, while others who live far from the lights of the big city are looking for a place closer to the action.
Even though a second home is often referred to simply as a vacation property, the decision to buy should never be taken lightly because there are some major factors to consider.
Downpayment is only the beginning
Buying a property means that your borrowing capacity will have to be evaluated and you will need to draw up a detailed budget. There are a number of other factors to take into account when buying a second home. After all, you’ll probably be spending less time in your second home than in your primary residence but you’ll still be faced with the maintenance costs and other expenses associated with home ownership. For example, you have to cover taxes, insurance, heating, electricity, water as well as possible renovations, seasonal upkeep and transportation. All of those expenses are in addition to what you’re already spending on your primary residence!
As you can see, before you start looking for the ideal location or the property of your dreams, you should take a close look at your budget to see whether you can afford all the costs that will be involved in owning a second home.
There are some projects, such as buying a house, that cannot be turned into reality over night. In addition to having to consider a number of factors, you must also be able to save sufficiently, all the while ensuring that the financial repercussions do not affect your lifestyle.
Whether you’re dreaming of a trip around the world, purchasing a new car, retiring under the sun, or acquiring a second home, your project must begin with a plan!
Advice… from the comfort of your home
Financially, it’s always wiser to save sufficiently to avoid having to rely on financing to accomplish your life projects. However, there’s no denying that in some instances, such as buying a home, it is quite difficult – and often, impossible – to save all that you need to pay it all in cash.
This however doesn’t mean that saving is futile. By saving as much as possible, you thereby minimize both your future monthly payments and the interest that accumulates on your loan. In turn, this will free up some considerable room in your budget.
Several factors can increase the value of your home. Investing in real estate is well known. Investing in art is too. But have you ever heard of investing in wallpaper or a wallpaper mural*?
Here and in Europe, artists are constantly reinventing the image of wallpaper and reusable wallpaper murals. Some works have even made their way into museums (Rasch.de).
In Quebec, at Muralunique.com, some thirty artists put their imagination to the service of this art form. For a universe dedicated to childrens’ imaginations, Annie Giroux, Tony Floreani, Birgit Schulz, Ruth Baker, Johanne Pépin have created great murals: a wacky library, a line of sheep with round eyes admiring the baby’s crib, a firehouse, a big wheel race, a hockey locker room, a construction site, a medieval castle, a space city, fantasy trees, enchanted forests, fairy tales, a pirate ship, giant alphabets, etc. Hours of passionate stories to share with children.
Donn Petelka uses a camera to plunge us into the bowels of nature, as shown by the attached photo of the Canadian Shield reproduced on a 15‘ x 9‘ (4.57m x 2.75m) mural. If all of the walls were covered with the Canadian Shield, we would probably feel the freshness of the caves. Continue reading →
Roger wonders how best to use his home renovation budget this year. He’d like to install a pool in the backyard with new landscaping and up-to-date garden furniture on a chic new patio. He thinks that would surely increase the resale value of his house, in addition to improving his family’s quality of life. After all, you only live once!
However, relaxing in his bathtub, he notices that the bathroom could use a makeover too. What should he do? If increasing the resale value of your home is an important consideration for you, installing a pool has no positive result. In fact, it can sometimes have the opposite effect.
According to CAA Quebec, kitchen and bathroom renovations yield the best return on investment. Same finding from the Association provinciale des constructeurs d’habitations du Québec. Continue reading →
Savings Account (TFSA) are two savings vehicles that each have their own objectives and advantages. However, which one is best for you?
When should you choose an RRSP?
The RRSP is most often used to build savings, tax free, for use at retirement. Tax on earnings is deferred until the funds are withdrawn from the plan, generally at retirement age. The RRSP is an excellent way to defer a portion of your salary in order to make up for any shortfalls in your income after you retire. Also, RRSP contributions can be deducted from your taxable income, which could lead to potential tax refunds.
RRSPs are especially beneficial when the applicable tax rate for withdrawals is lower than the income tax rate when the funds were contributed. This is the case for most people because their income at retirement is usually lower than when they were working. Also, RRSPs open the door to other related programs, such as the Home Buyer’s Plan (HBP).