Cottages are a big part of summer life for many people. Since they are typically smaller and cheaper than houses you live in full-time, it’s easy to think that getting a mortgage for a cottage is somehow less involved. This may be the case sometimes, but those instances are generally the exception to the rule. Here is some more information:

Same Principles Apply

When you set out to get a mortgage for a cottage property, the same Canadian mortgage principles that govern any mortgage still apply. Your credit score is still a factor, as are your income and down payment. You’ll also hear the same terms, rates and conditions that you heard when purchasing your principle residence.

However, the word “cottage” can vary quite a lot these days. The tiny little cabin in the woods is a cottage, as is the waterfront multi-million dollar chalet-style dwelling. The type of cottage you’re looking to purchase will greatly effect the type of mortgage you’ll need to get.

Different Factors that Lenders Consider

Along with the standard factors mentioned above, lenders also consider access when deciding on your mortgage. Access generally refers to whether your cottage property is accessible throughout the year or not. If it is not, you may be faced with higher mortgage rates and more restrictive terms and conditions.

Factors such as the condition of the cottage, where the water supply comes from and if it’s properly winterized also play a role. Sometimes even issues like an old septic tank or no permanent heat source can give a lender pause, or at least cause them to ask for improvements as a condition of the mortgage.

Always Make It Conditional

Since there are several possible complexities involved with buying a cottage property, it’s always advisable to make your offer conditional upon financing. You may be pre-approved for a recreational property mortgage, but if there is some feature or aspect of the cottage the lender doesn’t like and refuses to finance it, you don’t want to be stuck.

Refinancing the Principal Residence

If you are in a position where you already have a principal residence and you’ve built up some equity, you may want to look into refinancing that permanent home to buy the cottage. Sometimes this scenario results in a lower rate overall because there is no mortgage owing on the cottage. If you’re intent on buying a cottage, make sure you get all the information you can, weight your options, and speak with a mortgage broker for advice.