Posted by: Dave Currie
As we quickly approach the Spring season, more and more mortgage questions come up regarding a particular topic: Cottages.
Here are some of the basics when it comes to financing a Cottage:
Core Canadian Mortgage Principles Still Apply:
• The term cottage or “camp” as our friends in northern Ontario refer to it as has changed significantly over the last 15-20 years
• Today, these properties range from hunting cabins located deep in the woods to monster water front properties in Muskoka and the Kawarthas Basic financing principles still apply to any of these properties – your credit score, income and down payment
• Rates, terms and conditions – no different really than what you would expect from your principle residence
What’s different in the eyes of your lender?
• Primarily, one word – ACCESS
• Is your property accessible year round or not? If the answer is no, then your lender options are restricted and typically this means slightly higher rates and tighter terms and conditions
• Lenders want to know what kind of shape is the cottage in, obviously more remote and/or rustic the property the tougher it is to find a lender that will want to finance it
• ACCESS to Water – where is the water to your property coming from? Lake or drilled well?
• If your septic tank was installed pre-1974 it is very likely that it will need to be brought up to code, the cost of doing so is around $25,000.
• Consider refinancing your principle residence as an option to financing your recreational property, especially if your recreational property is not accessible year round, it will be easier and you will have more options available to you
• Always make your offer on your recreational property conditional upon financing so that you don’t get stuck with a property that you cannot find a mortgage for
If you have any more questions regarding the purchase and financing of a cottage and how it relates to your mortgage in Canada, do not hesitate to contact me at firstname.lastname@example.org or to fill out a contact request.
Also, tune into CP24’s ‘Hot Property’ every Thursday night at 7PM and you can have your mortgage question answered live on-air. If you’ve missed an episode, and need to know the latest on mortgages in Canada, you can watch previous shows online here.