Retirement is an exciting prospect to those who have planned a vacation for them and their families. The idea of traveling, relaxing and spending valuable time with family and friends is always something to look forward to. However, many retirees prefer to purchase a vacation home. While having a vacation home is a great idea for retirees, many may struggle to acquire one due to limited income; and others aren’t committed to taking a mortgage just yet in the years to come. But, if you’re already retired, and you want to buy a vacation home right now, you need to ponder s few questions. These questions will help you make the choice on whether to buy a vacation home or not. It begins with:
- Is the Vacation Home Affordable? : Many retirees upon their retirement often make the mistake of buying a vacation house on impulse. But before you even begin to think of purchasing one, you should consider first the cost. You’re better off if the mortgage on your primary residence is fully paid off. Why? Because your home has equity, and with that, you can always apply for a home equity loan to pay for your vacation home.
Also, bear in mind that a large down payment on your vacation home will result in considerably lesser interest and lesser monthly payments. So, the more money you can pay upfront for your vacation home, the less you have to pay in instalment.
You also have other affordable options. Work with a credit union, and not your bank. The reason is because credit unions offer their members better mortgage interest rates on homes. Therefore, it is way better to find a suitable mortgage plan from a credit union than from the bank that held the mortgage of your existing home.
While your vacation house’s main expense will be the mortgage, it’s not the only expense you will finance. You have to consider the cost of house insurance, utility bills, renovation, repairs and maintenance, tax and specific home management fees (especially for a vacation home that is miles away from your existing home).
- Will You Have The Time and Commitment for Your Vacation Home? : You can’t fault a retiree, as yourself, for thinking you would have enough time to do everything you want. It’s perfectly normal to think that. But sometimes life kicks in, and you may find your schedule even tighter than before your retirement. Think about it, you’d have to factor in time to visit the family, to play with your grandkids, to babysit, to exercise, to regularly visit the doctor, and even to volunteer for charity events.
If you don’t plan ahead, you may never have enough time to commit to your vacation home. In fact, you may end up spending a lot of money on home management fees and you’ve only ever slept in the place once! So you have to schedule time for your vacation home, because if you don’t, it’s a waste of investment. However, if you know you won’t have enough time to enjoy your vacation home, perhaps you shouldn’t buy it in the first place.
- Is Your Vacation Home Big Enough for The Family? : Many retirees fit family (extended included) into their plans for a vacation home because this may help them commit to it as a vacation spot for everyone. In this case, the plan is to find a vacation home big enough for the family. However, the bigger the home, the higher the cost, and many retirees can’t afford that. If you belong to this group, there are a couple of things you can do.
First, you could find a home big enough to accommodate your entire family which can fit nicely into your budget. When house hunting, you should look for houses with big bedrooms that can accommodate a number of people, and guest rooms, in case people visit. You should also ensure that your intended vacation home has a number of bathrooms and a big enough dining area to accommodate the whole family. If this exceeds your budget, then consider getting financial support from employed family members.
Another option, if you’re hell-bent on owning your own vacation home, you should consider renting it out. This gives you a steady return on your investment. Household properties are in high demand during seasonal and holiday periods. So if you plan on renting out your home, keep your family informed on the specific times in the year that they can visit the home. Keep in mind that seasonal demands for vacation homes can be hectic. You should be ready to reject offers from a lot of prospective tenants; else you may never enjoy that vacation home as much as you wanted.