Secondary Home or Family Home? Column by Jenni MacDonald

Here is the latest column by Jenni MacDonald: There are situations when a borrower is looking to purchase a “second home”. Some scenarios include, needing a city property to cut down on the long commute during the week, a child heading to school, a vacation property, a parent needing to live close-by, etc. Genworth and Canada Guaranty have programs available for Canadians to purchase these types of properties with as little as a 5% down payment. The two programs available through Genworth Insurance are the “Secondary Homes (Type A)” program and the “Vacation Homes (Type B)” program. Canada Guaranty offers a second home program called “LifeStyle Advantage”.

The Property: These properties must be single family properties and the occupant must be either the borrowers themselves or a family member. A Secondary Home or LifeStyle Advantage Property is required to have all of the permanent property amenities such as a full foundation, permanent heat source and potable water source. If the property is a Vacation Home, it does not necessarily need to be winterized or have potable water source. Some vacation properties do not have year round road access and these circumstances are allowed as well.

The Borrowers: Borrowers typically must have an Equifax Beacon credit score of at least 650 for all programs. The operating costs of the property must be covered completely by the income of the borrowers. No rental income or contributory income can be used from the property to qualify for the mortgage.

The Mortgage: Down payment for Vacation Homes must come from the borrowers’ resources but a Secondary Home down payment can also come from a gift from a family member. For the LifeStyle Advantage program, down payment can be borrowed or gifted from any arm’s length source. Purchase Plus mortgage products are available for all programs but cash back mortgage products are only available for the Secondary Home program.

If you aren’t sure if your situation qualifies for a “Second Home” program, please contact Jenni MacDonald anytime for a review of your mortgage needs.