a house on a beach

How You Can Use Your Home’s Equity to Purchase Vacation Properties

Conan Young in a suit

Adding a vacation home to your property holdings is a great idea for homeowners looking to expand their luxury, comfort, and even investment profile. The truth is, there are a great many options for financing a vacation property purchase on Waikiki Beach, coastal Florida, or the Lake of the Ozarks in Missouri. Wherever you find the greatest relaxation, considering a purchase in this area might seem like a bit of a pipe dream, but homeownership and adding a property to your existing net worth calculation, in particular, is actually far more easily done than you might think.

Why buy a vacation home?

Purchasing a vacation home is the perfect way to add unique freedom to your life. Planning a vacation is often a major undertaking that requires a series of bookings and calculations from transportation to accommodation. Taking one aspect of this plan off the list can make a major difference. In addition, many families in the United States and around the world find that routine vacations to the same beloved holiday spot make for great bonding experiences and a long term love of family holidaying.

Returning to your family’s vacation property each summer gives kids something wonderful to look forward to as the school year begins to wind down in the spring term, and allows parents the ability to relax a bit when thinking about options for the summer. A Vacation home in a favorite destination like Oahu or Waikiki can give you the freedom to learn a new skill as well. Surf lessons in Honolulu, HI are a smash hit with many families and can make for a story that returns each year during Thanksgiving or Christmas dinner with a rapt audience.

If surfing isn’t your thing, there are many other watersports that vacationers love to participate in. Bodyboarding lessons or a scuba certification will get you loving all that the water has to offer, and these lessons will give you a unique activity to engage in each year when you come back for your summer holiday at the ocean, lake, or gulf.

The opportunities to scuba dive all across the world is enough to bring an avid marine explorer back to the seaside each year alone. A holiday home that you visit frequently will quickly gain you entry into the secretive spots visited by locals only. From reefs that tourists don’t frequent to local dive bars with fantastic live acts and drink specials, making a town you love your vacation home comes with many fantastic perks that a one-time tourist simply can’t take advantage of.

Use all the resources you have to choose the perfect property.


Every homeowner understands that there are bizarre quirks in the real estate market. Property value is based primarily on price per square footage, but this price tag is quickly skewed by a million extraneous factors. Adding in a waterway boosts this price considerably. Likewise, quality of life upgrades like a tankless water heater, granite countertops, or hardwood flooring makes a home far more valuable. Finding the right home at the perfect price point can be an incredibly difficult task without the help of the market’s resources, like Nalula real estate research.

Nalula is a real estate research platform that aggregates a plethora of data points in order to identify properties on the market that are listed at fair or below market pricing. Many homeowners seek to inflate their asking price in the hopes of negotiating up from an average markup over their own purchase of the property. With high-quality research, you can identify a fair market value and begin your negotiating with this appraisal in mind.

The real estate industry has operated for years without the slightest measure of transparency. This is particularly virulent in the United States, but Nalula is working to erase the uncertainty that prevails across the entire real estate market. With in-depth analysis, a homebuyer can make a smart decision about the financial efficacy of a home buying opportunity unlike ever before. Not only can you evaluate the home’s space and upgraded features, but with market-wide research, you can comparison shop against other similarly decked out homes in the local market in order to determine whether you’ve found a fair price or an artificially inflated one.

But what about the financing?

Financing a new home purchase is far easier for current homeowners than those without this asset already in their portfolio. Buying a second home gives a homeowner a number of options. Possibly the most versatile option is in learning how to use your equity as a collateral point of leverage. A home equity loan is one that utilizes your most valuable asset as a collateral instrument in order to secure the financing necessary to purchase the new home. Instead of applying for a home loan from your lender with your credit score as the primary point of evidence for your ability to repay the mortgage loan balance, you put your home up as collateral.

To be sure, this means putting your home at risk, but that risk is often enough to prove to a bank that you are serious about making the mortgage’s monthly payments. With a home equity line of credit, a homeowner also can take advantage of favorable interest rate offers. With this additional padding on your application, financial institutions are typically more secure in their trust of you as a borrower, meaning they will offer better terms.

In order to take advantage of these improved offers, it’s imperative, however, to groom your credit score. Just like with any other loan, paying off credit cards and maintaining low balances on your revolving line of credit reservoir is important. With a traditional loan, this affects your eligibility and the interest rate offered. However, with a home equity loan, paying off credit cards and maintaining low balances is more of a point of practicality.

With lower credit card debt, you can focus on making the new house a home and take care of more interesting financial considerations. With a second mortgage, you will need to commit a significant portion of your income to pay down these debt obligations, adding monthly payments for credit card bills into this mix may put an even greater heaping of pressure on your finances. Planning ahead, just like you would with any home buying opportunity is the best way to keep your finances in check. Start six months or more in advance on increased savings and repayment amounts in order to create healthy cash flow over the long term.

Adding a vacation home to your family’s assets is a fantastic way to build lasting memories while taking advantage of the holiday time you have together. As your family continues to age, the way you use this property might evolve, but the times spent together at the lake, beach, or mountainside will remain as a permanent happy memory in each mind. To top it all off, interest rates and vacation areas are seeing a beat down in pricing as a result of COVID-19 induced economic retraction. Consider adding a new property to your holdings now while interest rates remain at record lows in order to lock in a fixed-rate at an awesome discount.