Would you love to own a ski property in North America but are unsure of how you are going to finance the purchase? From downsizing to equity release, we list some of the options for raising the funds to buy a beautiful ski property in North America.
You would just love to own a ski property in North America. Perhaps, you are drawn to Whistler, British Columbia with its impressive 200+ trails. You love flying through the forest on a zipwire there, seeing the wildlife (including the bears!), and playing golf. Maybe, you are gravitating towards Park City, Utah – the United States’ largest ski resort, with a total slope length of 250km. From Aspen to Banff, Palisades Tahoe to Fernie, there’s plenty to be excited about.
However, it may be that one of the main barriers to you becoming the proud owner of a ski chalet is the feeling that you simply do not have the funds to finance the property. Yet, there are all sorts of ways to raise the money, some involving a touch of sacrifice. The key is to use and arrange your assets better. Here are some routes to take to finance your ski home.
Downsizing
This is one of the most straightforward options for raising money to make your property purchase. If the kids have left home, it might be time to pack up their old things, hand them over, and prioritise yourself. You can sell your family home, choose a smaller property in the UK, and use the rest of the money to finance your overseas property purchase. This will also mean that you do not exit the UK property ladder. If you are only planning to live in your North American property part-time, then this could be the best solution.
You will still have to contend with the cost of selling, such as agency fees. Plus, you may be taxed on your second home. If you are planning to rent out the property that you spend less time in, then you will also have taxes on rental income.
It is worth knowing that, as of this year, Canada has placed a partial ban on foreign investors. If you are looking to be a permanent resident in Canada, then you will be able to purchase property there. Check out the rules first.
Equity release
If you are a homeowner in the UK aged 55 or over, equity release is an effective way to get some cash without having to sell your home, or even downsize. It is the process of releasing tax-free cash from the value of your home. The amount you can release is based on your age and how much your house is worth. People use it for helping their children get on to the property ladder and paying for home renovations, but you could also use it as a means of obtaining cash to go towards a ski chalet in North America. We recommend seeking out legal advice before you embark on this process.
Buying with family
Another way to finance your ski property is to simply not do it alone. Add your sister, your brother, your parents – and suddenly, the budget has doubled, or even trebled. You might even be able to look at bigger properties. Or homes closer to the slopes. Or chalets with luxury features like a home cinema.
However, buying with family or friends comes with its own set of challenges, such as how precisely you are going to split costs and how much time each contributor intends to spend in the home. It will take some work to organise, but you can save work on maintaining the property too.
Purchasing with a mortgage
Using a mortgage to purchase your ski property is another option. Opting for a dollar-based mortgage means that you will only need enough sterling to cover the cost of your deposit and closing costs. Furthermore, with the pound to dollar rate currently low by historic terms, it could be a nifty way to buy now but pay off the rest of your home loan at a time when the exchange rate – hopefully – is a little better.
Typically, buying with a mortgage will boost your purchasing power, and therefore, your rental income. As you will be able to look at bigger, primely located properties that will attract holidaymakers like bees to a flower.
Just beware rising interest rates. In the US rates have risen sharply to combat inflation, so lenders will make extra checks that you can afford the repayments.
Speak to a currency specialist
No matter the method you choose to finance your ski home in North America, you will have to encounter the currency market through the buying process. To avoid losing any of your carefully sought-out finances to the exchange rate, we recommend speaking to a currency specialist, like Smart Currency Exchange.
They might suggest using a Forward Contract, which allows you to lock in an exchange rate for up to twelve months, so that you can plan and budget effectively the financing of your ski home in North America.
Feb 26, 2024
