Retirees look forward to spending time relaxing, traveling, and spending time with friends and family. Often, they combine these activities into purchasing a vacation home. But, making this sort of purchase may be a huge step for people who live on a fixed income or who aren’t sure about choosing a mortgage in their later years. If you’re considering making this type of purchasing now that you’ve retired, carefully consider the following when making your decision.
Your first consideration must be the price tag. If you’re a retiree whose main residence is paid off, you are in a better position to create a purchase as you have equity in your current home and may be able to use it to find a home equity loan to help pay for your vacation property.
Remember that a larger down payment often results in a lower mortgage interest rate and lower monthly payments, so the more you can afford upfront for your vacation property, the better.
An alternative that may make this option more affordable is working with a credit union instead of your traditional financial institution. Credit unions often offer members lower mortgage rates of interest, so it’s worth shopping around for a mortgage before you commit to the bank that held your primary residence mortgage.
Keep in mind, however, that the mortgage for a vacation home won’t be your only cost. You’ll also need to be able to afford homeowners insurance, energy and other utility bills, regular maintenance, repairs, property taxes, and possible property management fees, particularly if your vacation property is a significant distance from your primary residence.
2. Do You Have Enough Time to Commit to a Vacation Home?
However, they frequently find themselves busier in retirement because they travel to visit family, spend time with grandchildren and assist with babysitting, devote time to getting fit, attend doctor appointments, and volunteer.
Scheduling time at your house is a must, so you can look after the property and make it worth your investment. If you already find that you have difficulty making time for all that you want to do, purchasing this sort of retirement property might not be for you.
3. Will Your Holiday Home Accommodate Your Loved Ones?
Many retirees address the matter of having time to see a retirement home and family by buying another residence that appeals to their loved ones and serves as a holiday hub for everybody. The trouble is, the larger the property, the more expensive it is. You will need to find a home option that can accommodate your family and your finances, and that often means a house with large bedrooms or a finished basement that can hold inflatable mattresses or pull-out sofas for visitors.
You’ll also want to be certain that you have loads of bathrooms and a large enough kitchen or dining area for everyone. If the costs become too high for you to be the sole owner, consider purchasing the property with other family members.
You’ll also need to consider how often and when your family will want to visit your vacation residence. If you’re the sole owner and leasing the house is one way for you to manage it, you will need to be very clear with your family there are certain times of the year they cannot visit as you’re going to be renting the house for income. Seasonal and holiday demands for the property can be a lot to handle, so you’ll need to be sure that you are ready to say no to someone when the time comes.