It seems that purchasing a second holiday home abroad is becoming more and more popular these days, but is it really worth it? Is it as straight forward as some may have you believe? The growth in the purchase of second holiday homes has grown due in the main to the growing popularity and improved access to information via the internet.
Using simple technology it is even possible to look around a house from thousands of miles away using a webcam.
While this does not necessarily give you the perfect view of your potential purchase, it can give a very useful insight.
So what are the drawbacks of purchasing a second home? There are a number of points to consider including: Finance How are you looking to finance your second home? Loan, savings, second mortgage? There are specialist in the market place who will consider loans for second homes, as well as offering advice on specific areas of the world which are showing good investment growth, and potential for the future.
However, before you even consider a second home you need to consider your financial situation - would you make sufficient use of the home to make it viable? Would you depend on rental income to cover the costs? While certain areas of the world, e.
g.
Spain, etc have been popular for many years, fashions can change and people do move on to new more exciting holiday locations.
If you are depending on rental income to cover costs, and you would struggle without the income then you are taking a chance - what would happen if there was a bad summer, or the holiday season was effected by the threat of terrorism? Terms Of Finance If you do decided to go ahead, and take out finance for your second home you need to be sensible and ensure the repayment structure fits in with your lifestyle and financial strength.
The worst thing that you can do is take on a loan term which is too short for you, and put yourself under pressure.
There are also additional risks if you borrow against any of your assets.
Local Area It is essential that you are familiar with the local area, or at the very least you have access to quality advice "on the ground".
It is vital that you find a reliable letting agent to maximise your chances of bring in extra rental income.
While you will need to pay for such a service, this will give you peace of mind rather than extra worry.
It is essential that you consider all of the options before acquiring your second home - and ensure that you do not over stretch your finances at what may be a critical time of your life.
You also need to consider whether there is a liquid market if you were to look at selling the property in the future.
A fair amount to consider!