Buying a holiday home

Whether it’s a seaside getaway, a rustic rural village house, a hobby farm or a hut in the mountains, the idea of a holiday house is tempting for many of us.
It may be part of your retirement plan, buying your dream home where you can relax and go fishing with the place paid off over the years.

Decide what you can afford then choose a location where you’d like to invest. Often there are emotional factors – it’s where you holidayed with your parents – or you’ve fallen in love with a character filled house in a country hamlet. But you need to be realistic with your choice if you don’t want to lose money.

Even if you buy your holiday house for family and recreational reasons, you can combine your use of it with renting it out and hopefully seeing a gain in value over the medium to long term.

If you’re banking on rental returns, consider the following:

• look for a property with broad-appeal
• buy in an area with proven visitor numbers (trawl rental listings and talk to the local agents about rental prices and seasonal fluctuation)
• Will you need to sacrifice the use of the property in peak season to maximize your returns?
• weigh up the gross rental return against the costs that come with owning and tenanting the property, such as management fees, advertising, insurance and cleaning
• if this is an investment treat the decision the same way and don’t be swayed by emotion.

Holiday rentals can be extremely lucrative if you buy in a popular holiday spot. If you plan on a financial as well as a holiday investment return, make sure you do your homework before you buy.

If you choose your location carefully when purchasing your holiday home, you’ve a good chance that your property will increase in value. Capital growth is generally strongest in towns with year-round tourist appeal and a well-established economic base. Quality lifestyle amenities like cafes, restaurants and bars are important, as are things like health services and transport. Unique or character properties will often have good capital gains, but there is more of a risk with a quirky property – it won’t be everyone’s cup of tea.

Also look for an area with a booming industry, along with the tourist trade.

It’s wise to spend some time in the location you’re considering, and do your research about the area both now and in the future. For example, are there any major developments planned, and will they impact on your investment by affecting the supply of properties for sale or rent. It also helps to get a ‘feel’ for a place and make sure it’s right for you, as you’ll be spending a lot of time and money there.

Buying a holiday home either as an investment or a lifestyle option is exciting. We can help with more than just the finances.

How much can I borrow? the easy to use calculator which gives you an indication of your borrowing capacity.

Calculate my repayments: find out how much your home loan could cost you with an estimate of the monthly repayments.

An A-Z Review^® with an ANZ Personal Banker: if you’re looking to buy a holiday home our Personal Bankers could help you:

• work towards your goals, get your everyday banking in shape and when you’re ready to buy a new home, provide an indication of what you might be able to borrow.
• protect your new home with ANZ Home Insurance, which guarantees full building replacement and covers you in the event of flood, fire, wind, rain and cyclone if your claim is accepted¹.  If you plan to rent the property you could also consider ANZ Landlord Insurance.

ANZ Home and Investment Loans: an ANZ Home Loan specialist can help you explore your options and find the right solution to suit your needs. And remember, ANZ is Australia’s most awarded home lender². Contact us today.

An ANZ Financial Planner can help you determine if buying a holiday home is the right strategy from a financial point of view. 

• Make an appointment with an ANZ Financial Planner.