Investment or Vacation Purchases
Investment or vacation purchases
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There are several potential benefits to purchasing a vacation home or investment property, both in the short and long term. Some of the benefits of these types of properties include
- Short-term rental income: If you purchase a vacation home or investment property, you may be able to generate short-term rental income by renting out the property on a short-term basis (e.g., on platforms like Airbnb). This can help offset the cost of owning the property and provide a source of additional income. It is important to discuss whether or not short-term renting is permitted in the particular properties you are viewing with your realtor. Some condos, townhomes or city zones do not permit rentals under 30 days.
- Personal use: A vacation home can provide a place for you to relax and enjoy time with your family and friends. It can be a great way to take a break from the stresses of everyday life and create lasting memories with loved ones.
- Potential appreciation: In the long term, a vacation home or investment property may appreciate in value, which can provide a financial benefit if you decide to sell the property in the future.
- Diversification of assets: Owning a vacation home or investment property can also help diversify your assets and provide an additional source of income or investment return.
It's important to keep in mind that purchasing a vacation home or investment property is a significant financial commitment, and it's not right for everyone. Before making a decision, be sure to carefully consider your financial situation and goals, and seek advice from a financial professional if necessary.
Utilizing rental income when applying for a mortgage
In Canada, lenders may consider rental income when evaluating your application for a mortgage, but the specific requirements for doing so can vary depending on the lender and the type of mortgage you are seeking. Here are a few general guidelines to keep in mind:
- Documented rental income: Lenders typically require documentation of rental income, such as a tenancy agreement or a rental contract, to support the use of rental income in your mortgage application.
- Verifiable rental income: Lenders may also require verification of rental income, such as bank statements showing rental deposits, or tax returns showing the reported income received from the rental property.
- Rental income requirements: Lenders may have specific requirements for the amount of rental income that can be used in your mortgage application, such as a minimum amount or a maximum percentage of the total mortgage payment.
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