Heather Holjevac enjoys crunching financial numbers for her clients, but one of the most engaging financial planning exercises she’s undertaken has been personal.

In 2007, Ms. Holjevac, 44, and her husband Joe debated whether they could afford a second property in Sauble Beach, Ont., near Lake Huron, where the couple could eventually retire. purchase meant taking on a new six-figure mortgage.

They looked at the merits of a second property compared with other financial strategies such as putting more money in RRSPs or non-registered funds, says the Mississauga, Ont.-based financial planner and tax consultant.

Ultimately, they decided to buy the property. The Holjevacs believed the property could appreciate in value and be a place they could occupy in 10 to 20 years. They could afford to make enough of a down payment to eliminate the cost of payments to Canada Mortgage and Housing Corporation for insurance and fees, and then obtain an affordable mortgage.

“The clincher was the rates at the time, because we got a variable mortgage, which was prime minus a half point, so currently our rate on that is 1.75%,” Ms. Holjevac says.

Purchasing a first home is often touted as the biggest investment an individual will ever make. But many people decide to purchase another property for recreational or investment purposes. That, too, is an enormous investment and something that requires a great deal of financial planning.

Before proceeding, there are a number of mortgage-related questions that need to be considered and discussed with the assistance of a financial professional, say the experts.

“People need to consider, ‘How does this impact my budget?’” says Gary Siegle, a regional manager in southern Alberta and Saskatchewan for the mortgage brokerage firm Invis. when discussing the purchase of a recreational property, for example, “as mortgage professionals we … do a series of calculations” to determine if they qualify for a mortgage and if so, the monthly payment they can afford.

Generally, the mortgage broker looks at two different ratios to determine an applicant’s qualification for any mortgage, says Tracy Irwin, a broker with The Mortgage Centre in Stoney Creek, Ont.

First, they calculate the gross debt service ratio, which includes the principal and interest on the mortgage payment, plus property taxes and heating costs, divided by monthly income; the total should not exceed 32%. second is the total debt service ratio, which includes calculations for all of the gross debt service ratio items, plus the carrying costs of all other liabilities that mortgage

candidates are making payments on, such as car payments, outstanding credit card balance, or on an outstanding line of credit, divided by monthly income. That percentage should not exceed 40% but it can go as high as 44% with a good credit score.

Determining how large a mortgage is affordable for an investment property is different than for a recreational property.

“An investment property is generally seen as the type of property that you’re going to be using to realize some sort of capital appreciation or future income stream,” says Scott Plaskett, a certified financial planner and chief executive officer with Ironshield Financial Planning in Toronto.

Second property takes planning