Buying a second home or vacation property in Whistler takes some financial planning, starting with creating a savings budget. Your first home buying experience may have taught you about down payments, closing costs, as well as maintenance and repair, but budgeting for a second home can be a little different.
If you are considering buying a vacation property in Whistler, these tips will help you plan and implement a savings budget that should make the process as smooth as possible.
Assessing your saving needs
A second home can often be more expensive than a first home, especially if you’re looking for an investment property or a vacation home. Generally you will be looking for a property in an in-demand market, which means that the purchase prices will typically be higher, in addition to larger tax and insurance payments.
As with any home purchase you should determine how much you can afford based on your income and debt obligations. A second home is generally a more long term decision, so you will be looking at how much you need to save over a specific period of time in order to achieve your goal.
In addition to your deposit (which is typically anywhere from 20-40%) you will have closing costs at approximately 2-5%, property taxes and homeowner’s insurance (if they are not included in your mortgage plan).
Creating a budget
Once you know how much you need to save, the next step is creating an action plan for that saving amount.
Determine your timeline for saving, for example if you want to purchase a vacation property when you retire and have 10 years left, you can determine your annual saving budget based on your required amount.
Sticking to this budget is incredibly important if you are serious about achieving your goals. Consider how much you’re spending each month and the amount of disposable income you have to commit to savings. All of these factors can affect your timeline, and depending on the outcomes you may have to review your expenses or attempt to increase your income to generate extra money.
Saving for later
In addition to your upfront costs of buying a second home, you will also need money set aside for the additional costs of second home ownership. These can typically include:
- Property taxes and homeowner’s insurance (if they aren’t included in your mortgage)
- General repairs and maintenance
- Utility bills
- Cleaning fees (if you are renting out your property)
Depending on how much you are saving for your purchase, you may wish to include these in your budget now, or alternatively wait until you have closed the property. However, if you are waiting until after you buy make sure it is a priority so that you are not caught financially unprepared in case of an emergency.
For more information about buying a second home in Whistler, get in touch with one of our local Realtors.