Buying a Holiday Home

As residential homeowners become financially established with their own home and a good secure job, then they often can feel tempted to buy or even build a holiday home or bach, generally close to the sea. This is a very Kiwi custom, and the holiday home is treasured by the family and often passed down from generation to generation. Many families revolve around there annual trip to the holiday home, and the long term memories of the family members are treasured.

In many cases the decision by the homeowner to build a holiday home or to buy one is largely an emotional decision, and often not a very good financial decision. This is because the holiday home does not necessarily appreciated value, but there will still be a mortgage to pay as well as rates and power and general maintenance. Typically the homeowner will also need a decent boat, and a decent four wheel drive vehicle to tow the boat.

Suzy Viamo the mortgage broker has been helping young couples buy their holiday homes for years

Mortgage brokers Manawatu often get involved, simply because the homeowner discovers that their bank is not really that interested in lending them the money. The mortgage broker however may have a lot more information then the banks, and may be able to find a way to finance all of this for the homeowner. The problem is however that building a new batch is generally just as expensive as building any other new house, and is often a lot more expensive because the batch is at some remote seaside location.

Additionally the location will generally be fairly sparsely populated, and so there may not even be a sewage water service and so the new house will require a septic tank plus a roof water supply. The mortgage brokers Gisborne may find that they have to point all these difficulties out to the homeowner, but generally the homeowner has already set their sights I’m getting there bach plus the mortgage broker wants their business and so they will find a way to finance all of this.

Te end result is that the homeowner can end up with a very nice batch along with the boat and four-wheel drive to tow the boat, but they may find that they have to work almost all the year in order to make the mortgage repayments on their bach. When they do have a holiday at the bach they may find themselves lying awake at night worrying about how they are going to afford us holiday and make their payments for the mortgage.

A lot of homeowners in this situation find themselves renting out the holiday home, these days mostly using Airbnb, but this of course introduces a whole new set of worries in terms of property management and maintenance. However Airbnb has made it much easier for the owners of holiday homes to actually make the payments on their holiday homes, but it does mean that the holiday home may not be available when the homeowner wants it.

Subdivisions and Finance

Mortgage brokers get involved in all sorts of property development including subdivisions for Residential Housing. The subdivision maybe rural land that has been  re-zoned by the city council, all the subdivision maybe vacant land lying within a city, click this link for more information. Vacant inner city land can be ideal, as it could be a hidden gem that has remained out of sight and mind four generations. Typically this may be a school that has been abandoned, or maybe government property such as railway yards which has been downsized and left fallow. While Neighbours may be well aware of a  vacant school, as it is probably a target for vandalism and such activities, the neighbours may not be aware that industrial Wasteland is also vacant.

 A problem for reclaimed industrial land can often be contamination because of Industrial chemicals such as oil. A residential subdivision in this case will need to make the land safe, and this could involve removing all the topsoil to a certain depth and dumping it and replacing it with new healthy topsoil.

 The mortgage brokers Westland sees financing a new subdivision can be complex and involves a number of different stages and milestones. Typically the developer is already a high net worth and highly risk tolerant individual, and they may have purchased the vacant land out of their own cash reserves. Very high risk tolerance individuals may even raise the finance via a mortgage broker for the purchase of the land, but this can be very risky as they may be depending on council decisions to even allow the eventual subdivision to go ahead. In some cases the costs to bring the land up to a level that is safe for Residential Housing can destroy the project.

Nevertheless if a developer can borrow the money to purchase the property, and if his mortgage broker can get the money on good terms that doesn’t involve the developer inexpensive monthly repayments, then the developer can make a very large amount of money if they can be certain to get the subdivision approved by the council. This generally means that the developer is very experienced, knows the science and the town planning regulations in detail, is on good speaking terms with the key decision makers on the council and has a very good mortgage broker.

 In many cases the vacant land may change owners a number of times before being eventually purchased by a developer that is actually capable of making something happen. It is probable that the purchasers who then on sell the land still make a tidy profit in the trade, but it is the developer who stands to make the most money but of course they also must take the most risk.

 The mortgage broker in this case needs to be able to find lenders who can cope with the level of risk facing the developer, but there are a number of high net worth individuals and consortiums they are prepared to  loan money to these developments, but of course at a high interest rate. If the developer has a very good reputation for completing the project they start then the lender or lenders may even be happy to let the developer capitalise the monthly repayments on the loan.

 For the developer the high interest rates are just a mild inconvenience, because the loan is for relatively short term, it will be paid off as soon as the cash flow allows it, and the profit from the project will be vastly larger than the cost of the loan. Mortgage brokers Southland will know this, and they must be able to prevent this in a highly credible business case to lenders.