Cottage Mortgages

Looking to escape from the city during the summer season?

If you do not have the money, on-hand, to buy the property outright, you will need to borrow the money. While the basic process of applying for, and qualifying for, a cottage mortgage are the same, lenders will look at many more variables when assessing the property before lending the money. It is important to start looking for mortgage options before you can fully enjoy the ducks and docks of your cottage paradise!

One thing that insurers and lenders will look at is the type of cottage you are planning to buy. To help simplify this, we’ve broken the types of cottages into two groups, A and B:

Cottage A  properties, are those with permanent foundations (installed below the frost line), year-round access, a permanent heat source, and potable water – whether it be from municipal services, a well or treated lake water. These properties are zoned residential and are for personal use.

Cottage B properties, are those with wood stoves or fireplaces, sitting on blocks or piers, having only seasonal access, and/or no potable water source. These types of properties are not sought after by most Canadian banks to mortgage. This means for this type of property you should approach an alternative lender professional.

Other things to keep in mind, are:

  • If you are putting down less than 20%, you will need mortgage default insurance just like a home purchase.
  • Does it fit within your overall financial plan? No matter how you choose to finance your purchase, for the lender it is always about whether you can repay the debt.

If you do plan on purchasing a Cottage and are looking into a Cottage mortgage, it is a decision that does require very thoughtful planning process. Contact me if you have any questions!