Learn These 3 Differences Of The 2nd Home VS Investment Property Before Buying A New Property

Some people often think that buying a 2nd home is the same as buying a house for investment. The truth is that both of them are different. You should learn first about the 2nd home vs investment property before buying a new house. 

As a result, you have a clear goal of buying a new house. It is the same case when you have a plan to buy the cheapest car insurance. Here are the differences between a second home and an investment property. 

The Function of the House 

Buying a second home means purchasing it for living. It means you will use the house for yourself, such as for vacation, a place for working, gathering, and others. The location is also often near the current residence. 

In short, you don’t think about earning money from the house. In contrast, buying a property for investment is buying for earning more income. You can rent or resell the house for a profit. Investors may buy more than one unit to get multiple tenants or buyers. 

Indeed, the consideration of buying the house is more commercial than personal. For example, the location of the house should be strategic even if it is a bit far away from your current house, the design has to be attractive, and the profit you may earn from the property. 

The Mortgage 

The mortgage for the 2nd home vs investment property is also different. In some countries, taking a mortgage for the second home is easier and cheaper compared to taking a mortgage for an investment property. 

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On the other hand, the interest rate is similar between the second home and investment properties. Lenders often charge a higher interest rate due to the risks. Borrowers can stop the loan payment and walk away when buying these types of properties. 

The Down Payment 

The down payment is also something you should consider before buying a second home and investment property.

Most lenders request a higher down payment for borrowers who want to buy property for investment compared to those who borrow the money for a second home. 

The standard down payment for a second home is 10%, but it can be 15% to 20% for a home investment property.

The more properties you want to buy for investment, the higher the down payment. You need at least to save up to 25% for the down payment. 

Getting information about the 2nd home vs investment property in certain countries is crucial. It is not only helping you to get the best property but also easier in managing the buying process. Best of all, you get the benefits from a new house based on the purpose of buying it.      

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