Guide To Buying A Second Home In Vermont

Vermont ranks #2 for the highest percentage of non-primary residences (ahead of #3 New Hampshire and behind #1 Maine), a statistic that isn’t too surprising given all the natural beauty and year-round recreation options here. Whether you’re an out-of-state resident looking for a bucolic retreat, or a Vermonter seeking a second home near the kids and grandkids, you can find what you’re looking for in one of our appealing northern Vermont towns. Either way, in this article we’ll help you figure out where to buy a vacation home in Vermont, what it can be used for, associated expenses, and how to navigate the financing process.

What Is The Purpose Of Your Second Home?

People often think of luxury when they hear the phrase “second home,” but that isn’t always the case. Retirees, for example, may want two lower-maintenance properties so that they can split time between children and grandchildren as well as avoid harsh winters and summers.

Even a second home used solely for leisure doesn’t need to be huge. A pied a terre, French for “foot on the ground,” refers to any small, secondary home, such as a condo or one-bedroom cottage.

Finally, a vacation home can provide both pleasure and financial gain. If you purchase a house or condo near skiing or lakefront, you could enjoy it for yourself some of the time and rent it out to vacationers the rest of the time.

To get clear on how you’d use a second home, answer these questions:

Where is the best place to buy a vacation home?

This will depend on the types of activities you wish to enjoy at your second home, as well as your motivation. If you are buying solely for sentimental or other emotional reasons, your calculus may be different than a pure investment purchase.

What can you do with vacation homes in Vermont?

Vermont skiing is a huge draw for travelers, but it’s not the only reason to come here. Residents and tourists alike enjoy our state’s bodies of water, hiking and bike trails, small town fun, and gorgeous fall foliage.

If you are planning to use your second home partially or primarily as a rental home, you’ll want to check out the existing competition on sites like Airbnb and VRBO. Make sure there is enough demand (and not too much supply) and that market rents will be enough to cover your expenses and make it worthwhile.

Are you already familiar with your desired location?

If you’re looking to buy in your favorite vacation destination, you’re probably already familiar with the area and the amenities/activities available there. If you have a new town in mind, we recommend renting there first to get a feel for the place and whether it lives up to your expectations.

Can you retire there?

Some people purchase a second home in the place they plan to retire. Doing so years ahead of your actual retirement gives you a chance to adjust to your new location, as well as rent out the home part of the year to help pay off the mortgage loan.

Is it a good investment?

Look at resale values, market rents, and taxes. Our Wealth Management team can also help you figure out how a second home fits into your long-term financial planning.

Where To Buy A Vacation Home In Vermont

Canadians account for much of the second-home market in Vermont, and the state’s proximity to major cities like Montreal, New York and Boston makes it an attractive destination for city dwellers looking for an escape from the hustle and bustle. So, if you’re looking where to buy a second home near NYC, Northern Vermont is roughly 6 hours away. And if you want to know where to buy a second home near Boston, it’s just over a 3-hour drive to Stowe and surrounding towns. With skiing, lakes, off-the-grid cabins, hunting, and hiking trails, Northern Vermont is perfect for weekend getaways, week-long vacations, and longer stays. If you’re currently working remotely due to Coronavirus, why not get out of the city for a while and enjoy the slower pace of life up north?

Let’s take a closer look at 3 top destinations in Northern Vermont:

Burlington

Situated on the eastern shore of Lake Champlain, Burlington is the state’s most populous city and also home to the University of Vermont. There is truly something for everyone here, from the waterfront and surrounding countryside, to downtown dining and entertainment. The city’s park system includes more than 35 parks and beaches. Browse current real estate listings in Burlington, where the median home value is $353,322.

Montpelier

The state capital, Montpelier offers a mix of downtown fun, water views with the Winooski River running along the south edge of town, and plenty of outdoor recreation. Check out the complete list of community parks and beaches and browse real estate listings in Montpelier, where the median home value is $246,683.

Stowe

A popular skiing destination, Stowe is next to Mount Mansfield, known for both hiking and skiing. Outdoor enthusiasts will also enjoy Smugglers’ Notch State Park and the Stowe Recreation Path. The official Stowe Tourism site will give you a full range of ideas for what to do in your potential second home there. Ready to look at houses? The median home value is $473,420.

Aside from these destinations, there are numerous lake communities near Lake Willoughby, Crystal Lake, Lake Morey, Lake Dunmore, Caspian Lake, and Lake Elmore, as well as communities near ski resorts such as Killington, Sugarbush, Jay Peak, or Smugglers Notch.

Financing Options For Second Homes

If you think you need to pay all cash for a second home, rest assured that home loan options are available, just as you can finance the purchase of a primary residence. The only difference is that getting a mortgage for a second home usually comes with stricter requirements for credit score, down payment, and more. If you’re concerned about qualifying, consider purchasing a vacation home with another person, such as another family member.

What Are The Related Costs of Buying A Second Home In Vermont?

Of course, home price isn’t the only cost associated with owning a vacation home. Here are some other ongoing expenses to keep in mind as you budget for a second home:

• Property taxes: Generally, homes that are not a primary residence are taxed at a higher rate. Check the website of the town you plan to buy in to see current property tax rates.
• Homeowner’s insurance: This may also cost more than what you pay for your current home, depending on the house itself as well as what you plan to use it for. You may also need flood or hazard insurance depending on the home’s location.
• Maintenance and Repairs: Costs will vary depending on whether you buy a condo or a house, the age of the property, and its condition when you purchase it.
• Furnishing: A second house means a second set of everything, including furniture, bedding, and kitchenware.
• Landscaping: If you’re not going to live there year-round, you may need help with mowing the lawn and/or gardening.
• Cleaning: If you go the short-term rental route to generate income, you’ll want to consider paying for a professional cleaning service.
• Property Management: If you use a professional company to help you manage your second home and rental business, you can expect a property manager to keep a certain percentage of the rent they collect. Other fees may apply–ask before you choose a specific property management company.
• Utilities: Water, gas, electricity, and Internet/cable.

Contact The Union Bank Mortgage Lending Team!

Are you looking for second-home mortgage loans in Vermont? Experience for yourself why more Vermonters choose Union Bank for their mortgage than any other bank. Our mortgage lenders have decades of experience with local real estate markets. Sit down with us to review your finances and discuss your options for second-home financing. We are happy to answer any questions you may have about vacation or investment home mortgages.

Give us a call at 1.800.753.4343, or drop into your nearest branch in Berlin, Fairfax, Hardwick, Jeffersonville, Jericho, Johnson, Lyndonville, Morrisville, St. Albans, St. Johnsbury, Stowe, or Williston for more information. You can also apply online or download a mortgage application to apply in a local branch.