Cottages and second homes can be financed at up to 95% of their value, depending on property type and characteristics.
Cottages:
Cottages are divided into two types for the purpose of mortgage financing. Properties with year-round access, a permanent foundation, municipal services, drinkable water and winterized with a permanent heat source, are considered type 'A' properties. They can be financed up to 95% of property value and can be amortized up to 35 years.
Cottages that do not meet the above criteria, such as those with seasonal access, or access by boat only, are considered type 'B' properties. They can be mortgaged up to 90% of value and the maximum amortization allowable is 25 years. The mortgage insurance premium is higher for this type of property.
Some people will refinance their principal residence for the down payment on a second home or cottage. If you have sufficient equity, you may choose to refinance your principal residence to purchase the second property outright.
Second Homes:
People who live a considerable distance from their work will sometimes purchase a second home close to their job, to reduce the weekly commute. Others will buy a second home for an adult child to live in while attending college or university.
Financing is available at up to 95% of property value for second home purchases. The property must be intended for occupancy at some point during the year by the borrower, or a relative of the borrower. It is possible to purchase a second home with up to 4 units as long as one unit is to be occupied by the borrower, or a relative. Second homes qualify for the following types of financing: purchase, new construction, refinance, and purchase or refinance with improvements. Maximum loan-to-value varies by product and number of units.
People who live and work outside Canada, and are looking for financing in Canada for a second home or cottage, will require at least 35% for a down payment.
For more information on cottage or second home purchases, please contact
- Janet MacDonald
,
- Colin Birkas at 613-929-7629 or
- Jeff Dillon at 613-453-3663 or
