Financing a second home MortgageFunding a Second Home Mortgage
Think about using the capital in your main home to buy a second home or holiday home. A second mortgage can be obtained on your home or you can request a line of credit and use the money to buy the second home. All interest can be deducted from your personal tax.
Now you can get a mortgage on your second home. Thats usually requires a down-payment of about 20 per cent of the loan and usually has a higher interest rate than your home. Request a mortgage for the second house. There may be a more accessible creditor locally than one in your home town who doesn't know the markets where your second home is at.
You can also subtract these mortgage interest rates. It can be an affordable alternative if your second home is not too costly and you can afford it with a short-term mortgage. Search for a hire buy options in a holiday destination or holiday area. A number of real estate landlords in the resorts will draw up personal agreements to rent a house with a buying choice, or with a part of the rental agreement, either month by month or year, going towards a possible sale.
When you think that you can lease a second home for part of the year, consider setting up a private corporation or LLC to buy it as an initial outlay. While you still have to make the payment, the mortgage will be on behalf of the LLC, and you can use the rental to pay the payment.
It will not alter your fiscal position as the revenue and expense of an LLC passes to the owners, you. You can still subtract mortgage interest, but must declare rentals.