What to consider before buying a vacation home as a retiree

Retirees expect to spend time relaxing, traveling, and spending time with friends and family. They often combine these activities to purchase a vacation home. But making this type of purchase can be a big step for people living on a fixed income or unsure about getting a mortgage in their later years. If you’re thinking of making these types of purchases now that you’ve retired, consider the following carefully when making your decision.

1. Can you afford a vacation home?

Your first consideration should be cost. If you’re a retiree whose primary residence is paid off, you’re in a better position to make a purchase because you have equity in your current home and can use it to get a home equity loan to help pay for your vacation property. .

Keep in mind that a larger down payment often results in a lower mortgage interest rate and lower monthly payments, so the more you can pay up front for your vacation property, the better.

Another option that can make this option more affordable is to work with a credit union instead of your traditional financial institution. Credit unions often offer members lower mortgage interest rates, so it’s worth shopping around for a mortgage before committing to the bank that held the mortgage on your primary residence.

Keep in mind, however, that a vacation home mortgage won’t be your only expense. You’ll also need to be able to pay for homeowners insurance, energy and other utility bills, regular maintenance, repairs, property taxes, and potential property management fees, especially if your vacation property is a distance away. significant part of your primary residence.

2. Do you have enough time to commit to a vacation home?

Retirees often retire assuming they will have all the time in the world to do what they want. However, they often find themselves even busier in retirement because they travel to visit family, spend time with their grandchildren and help with child care, take time to get in shape, attend more medical appointments, and volunteer. .

Scheduling time in your home is a must, so you can take care of the property and make it worth your investment. If you already find that you have a hard time making time for everything you want to do, buying this type of retirement property may not be for you.

3. Will your vacation home fit your family?

Many retirees address the issue of having time to visit a retirement property and their family by purchasing a second home that will appeal to their family and serve as a vacation hub for everyone. The problem is that the larger the property, the more expensive it is. You’ll need to find a home option that can accommodate your family and your budget, and that often means a home with large rooms or a finished basement that can hold air mattresses or removable capes for visitors.

You’ll also want to make sure you have plenty of bathrooms and a kitchen or dining room big enough for everyone. If costs become too high for you to be the sole owner, consider buying the property with other family members.

You’ll also need to consider how often and when your family will want to visit your vacation home. If you are the sole owner and renting the house is a way to pay for it, you will need to make it very clear to your family that there are certain times of the year that they cannot visit because you will be renting the house for income. The seasonal and holiday demands of ownership can be difficult to handle, so you’ll need to make sure you’re prepared to say no to someone when the time comes.