Holiday homes are on the rise according to the latest national census, with 165,000 people now owning a second home in England and Wales. If you’re considering making this investment for your family, follow our guide and let us help you make your decision a little bit easier.
- Home away from home
Undoubtedly the best thing about owning a second property is that you are providing your family with a home away from home. It will be a place to create new memories and enjoy your time together as a family. It is a place to relax and switch off and make your own private getaway. The best part is you don’t have the fly, but can have a quick staycation getaway whenever you like.
The government have just announced their plans to raise the retirement age to 68, and with the figures set to keep rising, planning ahead for your retirement is more important than ever. A lot of people who invest in a second home, choose an area they might like to retire to eventually. In the mean time, it can be used as a holiday home by your family, with the thought that one day you might move there, giving you holiday opportunities while planning for the future. This means you can become a part of the community so when you finally move you are not going into the unknown. You can get to know some of the locals and become comfortable in the area.
- A long-term investment
A second home can benefit you finically if you choose to rent it out when you are not using it. What is more, if you choose the right area, your property is likely to gain value over time and can be a great long-term investment. It will therefore not just benefit your family emotionally but also financially.
- Initial costs
While a second home has the potential to benefit you financially in the future, it is a considerable initial investment. You might be asked for a bigger down payment than you paid for your first home, typically around 20% but it could be as high as 35%. You should also be aware that the interest will be higher than on your primary home and you require a better credit score and a substantial income. It is also essential that you prepare for the potential increase in property tax.
- A change in your circumstances
It is always a possibility that your current situation could change. You might not be able to use your second home as much as you initially thought due to a change in your financial situation. You or your partner could also get a new job which allows for fewer holidays and what you see as a peaceful area to escape to, could hold little interest for older children.
Like any house, a second home will require maintenance. The level of maintenance required will be even greater if your second home is located in an area with extreme weather conditions, such as in the mountains or on the coast. The amount and urgency of maintenance required will also increase if you are renting out your house.
We hope this has helped you move towards making your final decision. Make sure to seek out independent advice from a mortgage broker in Barnsley to understand the best funding options for your second home.