The rules are different when buying your second home

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Vernon-based mortgage specialist Deb White sees a lot of people buying second homes in her area. Many of these buyers are from the sprawling city and expect a bit of peace, quiet and open space. But the rules are a little different when buying a second mortgage.

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For one thing, a second home requires a minimum down payment of 20 percent, not five, like for a first home.

“Buyers must qualify for their primary and secondary residences at two percent above the published rate, without any rental income,” White said.

After spending so much time at home for the past two years, it’s no wonder people are looking for relief from the density and noise of the city.

“They want to be close to the lakes and away from the hustle and bustle of Vancouver, so they’re buying second homes,” White said. Most don’t stray too far from cities.

“Out on the pitch, it’s a little more difficult for them. So it’s too far from the mainstream. We don’t have a lot of people buying second homes in the Williams Lake and Prince George area. It’s more from Salmon Arm to Osoyoos.”

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People looking to build on vacant land face an even bigger hurdle. Bare ground requires 50 percent down payment.

“It’s super, super hard,” White said. “Five years ago, I was able to get vacant land, depending on the location, with a 25 percent down payment. Now the lenders want a building plan in place. They want to see a contract with the builder; they want to see the finished project.”

The stricter requirements are due to risk, she says.

“With construction costs, it’s sometimes cheaper to buy a house already built than to build a house.”

White also points out that some types of housing are difficult to finance.

“Many people think that all they can afford is a mobile home or a prefab or modular home. But the thing is, in our area, in the Interior and up north, CMHC will give a modular or manufactured home a 40-year lifespan. As the age of the mobile increases, your amortization and your payments will increase.

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Buyers should check the statutes of the area they are considering.

“People come here thinking they’re going to renovate their new home and put a suite in the basement and rent it out on Airbnb. But then they find out that the statutes don’t allow that. I have found in the documents from the real estate agent that they are adding that as a condition, confirming the statutes in the area.”

Lenders are hesitant to finance Airbnb dreams. “They are not being viewed favorably. We don’t have a lot of lenders using Airbnb revenue.”

Most of his clients for secondary properties are between 40 and 60 years old and are looking for an investment without problems or complications.

“When they buy a second home up here, they don’t want to have to worry about it. Nine times out of 10, we find people who buy from resorts so they can come here, do whatever they want and have fun and not have to worry about gardening or hiring someone to do it. .”

White recommends doing your due diligence and finding a real estate agent who knows the area well.

“We had a real estate agent who helped clients buy property here, and it was too much to ask,” he warned. “Make sure you know the area and talk to the locals. That is my biggest advice.”