Buying a second home or property
Purchasing a second home is not too different from buying your first property. Your ability to afford it usually depends on your ability to gain bond approval. The benefits of purchasing a second property include having a holiday getaway, a future retirement home, receiving rental payments which can be put towards paying off a bond, or adding to your investment portfolio.
Many people see buying a second property as an investment opportunity. In order to make the purchase successfully you will need to identify funding sources for a deposit, as you won't be selling your current home and using the proceeds, and you will also be required to pay a large monthly amount to cover the mortgage repayments of both homes and other necessary expenses.
Long-term investment
There are two ways that people might benefit from second home ownership, one being long-term investment and the other short-term. Long-term investments include buy to lets and holiday homes, while 'fixer-uppers' are taken up on a short-term basis. Long-term second home investments will generally accumulate value over time, dependant on trends in property prices, but may also generate a rental income.
Short-term investment
A short-term second home investment depends almost entirely on your ability to a) spot a bargain, and b) make sufficient improvements to raise the value enough to turn an immediate profit. The risk element with this kind of purchase is much greater than a long-term investment, as you are unlikely to see a particularly beneficial fluctuation in house prices over such a short period of time.
Non-financial benefits
Buying a second home for personal use can be a much more fulfilling investment, as the benefits extend beyond the financial. Having access to a holiday home can be seen as a lifestyle change. Your second home becomes your own private getaway, where you can escape the stress of work in more idyllic surroundings.
