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Holiday Home Mortgage

Millions of people would like buy a second home or vacation home but lack the cash to do so. Many of these people could purchase a holiday home right now if they took out a mortgage to do so.

Taking out a second home mortgage is much like taking out a mortgage for your regular home. The major difference is that you won’t be able to qualify for some of the tax benefits available to those who purchase a regular home.

The main thing you will need to qualify for a mortgage on a second home will be the income to make the mortgage payments and a good credit score. Mortgage lenders who work with individuals with bad credit probably won’t help anyone purchase a second home.

Questions you should ask

The main thing that anyone who is applying for a second home mortgage needs to ask themselves is this: can I afford to make a second mortgage payment each month? If the answer is no then taking out a mortgage on a vacation home is probably not a very good idea.

The next thing you need to ask yourself is how much will you and your family use the holiday home? If you plan to spend weeks or months at the home each year it might be worthwhile. It doesn’t make sense to take out an extra mortgage on something use only for a couple of weeks a week. If you plan to use the second home only for a weeks a year renting would probably make a lot more sense

Dangers of second home mortgages

Anyone who is considering a holiday home mortgage should consider making that move very carefully. Remember you are taking out a second mortgage, if you won’t be able to make the payments in the future it could lead to foreclosure.

Having a foreclosure on your record, even a vacation home fore closure could give a bad credit history. A bad credit record could prevent you from getting loans and mortgages in the future.

This means that only those with a lot of extra income should seriously consider getting a mortgage for a second home. Those with limited incomes or uncertain incomes should not consider getting a second mortgage. Remember you could put the money you spend on a second mortgage in your savings and use it for a nice vacation instead.

Some alternatives

There are some alternatives to getting a second home with a mortgage that you should consider. One good alternative would be to buy a home in the recreational area where you want your second home. For example, buy a home on the lake rather than a cabin on the lake.  This way you would get the tax benefits from buying a home and you would have only one mortgage payment.

Another good alternative would be to rent a vacation home. A rental might cost you money but you only pay for a rental when you’re actually using it. This means the money you could be spending on a vacation home mortgage would be available for other purposes such as investment when you aren’t renting. Renting also gives you the flexibility to go to other locations for vacation.