USBuying a Second Property
What you need to know if you’re looking to finance a vacation home or purchase a residential investment property.
Why get a second property?
You may be looking to finance a vacation home or purchase a residential investment property. Both of these home ownership goals can be achieved through a variety of financing options.
- You can apply for a new mortgage loan secured by the second property.
- You could refinance your existing mortgage loan to access the equity that you have built in your primary home.
- You may want to consider a TD Home Equity FlexLine which offers the flexibility of a line of credit with the stability of a term portion.
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Your second property: what you need to know
- A high ratio mortgage is available if you or family members plan to live in the home, on a rent-free basis.
- Investment properties are not eligible for high ratio default insurance-a down payment of at least 20% is required.
- There may be unit limitations of up to 4 units on a rental property.
- The Canadian Home Buyers Plan for using RRSP's is not eligible on a second property.
- Some costs are much the same as your first purchase: valuation fees, legal fees, and a title search.
Ready Advice
If a buyer’s deposit is less than 20% of the purchase price (or value of the property, whichever is lower) the mortgage must be insured against payment default by a Mortgage Insurer, such as CMHC.
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Ready Advice
A Down Payment is the amount of money you have towards purchasing your home. Many homebuyers make down payments of 5% to 20% of the total value of the home. The purchase price minus the down payment is the amount that generally requires financing from a bank or other financial institution.
Ready Advice
A TD Home Equity FlexLine is a Line of Credit that is secured against equity you have in your home. It offers both revolving and fixed components.