Vacation and Secondary Homes

A cottage at the lake or a condo in the city where you travel for work.

Owning a secondary home can be the solution when accommodations are needed on a regular basis.

Many people dream of owning a property for enjoyment, but it’s just too out of the way to be their primary residence. Whether it’s a quick getaway spot or an extended stay in a warmer climate, this option comes with many benefits.

What’s the Difference?

A vacation home is also sometimes called a recreation property, so the two terms mean the same thing. A secondary home is often subject to the same requirements as a vacation home when it comes to financing. So what’s the difference?

Vacation Home Secondary Home
can be seasonal only single family dwelling
must have running water
(not necessarily potable)
must have year-round accessibility
intended recreational use indoor heating/plumbing
must use it for only a portion of the year
(not a primary residence)
requires 20% down payment
  must live there for at least a portion of the year
  can be used by a family member to live in
(but not rent)

Can It Become a Rental Property? 

No, you cannot rent out a vacation or secondary home. You can however buy a secondary home and rent out the first. You want to get the correct mortgage to meet your needs, so it’s good to know that a vacation or secondary home is not a rental property.

Can I Afford It?

These days many homeowners with existing mortgages in good standing, with good credit, are finding themselves in a position to buy a second home. Here are some common financing strategies that could put your dream within reach:

Home Equity Line of Credit

Leveraging your home equity into a second property purchase is often a sound investment with a reasonable assumption of a substantial pay-off in the future when the property is sold. The value of home equity built up from payments made on an existing mortgage can often be larger than many homeowners realize.


Secondary Home Mortgage

This type of mortgage often has lower interest rates than private loan lenders, so always ask a mortgage broker about your options. If you can prove stable income and an established credit rating, similar to when you qualified for your first mortgage, you may be moving in sooner than you think.


Refinancing an Existing Mortgage

When you refinance, a homeowner often has access to cash and can combine the value of new assets to reveal a more accurate and positive financial situation. Consolidating other existing debt is also an effective strategy when considering how to begin to afford a second home. While an existing mortgage might be extended to accommodate additional debt, the interest rates are often more favourable resulting in lower payments overall.

Crucial Advice for When It Counts

At Castle Mortgage Group, we’ve seen enough to know when a financial goal is within reach. We work hard to achieve the lowest rates available for you because we know every dollar counts when a dream is close to becoming a reality. We take the time to make the process clear, so you can make the best decision possible.

It’s only when you get the keys, with ease, that we feel satisfied. Give us a call today!

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