Saving up for a second home: what to consider

Whether you’re retiring with the hope of purchasing a new home, or if you’re younger and are lucky enough to have come into money, then a second house might be on the cards. While it is a second asset, there is still the same pressure to get it right. You don’t want to invest your hard-saved cash into a place that feels neglected, or has a surprising catch to it. If you are ready to buy a second home, then here are some aspects to prioritise. 

Location

Where you want to relocate to is just as important as the quality of the home you want to move into. Ideally, you want your second house to be a retreat like one of the luxury villas in Marbella, where you can escape to when times get tough. Choosing a place that is sentimental to you will help to ensure that your second home is somewhere you actively want to spend time. 

Quality

Depending on your budget, you will want your second home to feel as if it was worth the investment. You may wish to pick what many people term as a ‘fixer-upper,’ but this can sometimes be risky. After all, if it’s in a separate country you will have to take time out to fix up the home and get it to peak condition, which may put you at a loss, particularly if you have a full-time job. 

Budget

The size of the mortgage you will need to pay off your second home is very important. Can you afford to pay off two homes at the same time? You can indeed remortgage if you’ve successfully managed to pay off your first home and there are other options such as equity release. This means you extract some of the value from your current home to pay off the second one. This method is not without its risks, so always make sure that you contact a reliable, impartial financial advisor first for advice, not an equity release provider. 

Reserves

If you have £150,000, say, and you want to invest in a luxury villa, then make sure you have some leftover budget for extra costs. It might be worth your while to pay a smaller deposit, take out a slightly higher mortgage and keep some of your stockpiles to pay for extra costs and maybe even some rainy day incidents. You might think you have everything covered, but then experience significant damage as a result of a natural disaster. Always reserve some cash, even if the worst never happens. 

If you have enough savings or windfall profit to invest in a second home, then congratulations are in order! Remember to be cautious with your deposit: within that sum, you need to factor in infrastructure and decoration changes, and also solicitor’s fees. Once all of that is out of the way, you can kick back and enjoy the luxury of a bonus property.