With interest rates low and the current economy feeling pretty stable, many people are turning their thoughts to owning a cottage, cabin or vacation getaway. After all, who doesn’t dream of escaping city life to enjoy boating, fishing, swimming, entertaining friends and puttering around at their very own family cottage from time to time? You may also be thinking of buying a recreational property as an investment or to rent it out for added income. Whatever your reasons, there are some key considerations that you need to mull over before diving in and signing on that dotted line:
The coveted Muskoka, Parry Sound and Haliburton regions are popular for many reasons, especially the proximity to the Greater Toronto Area and their gorgeous lakefront properties. Unfortunately, real estate prices (as well as property taxes) have gone through the roof in some of these areas, taking cottage ownership out of reach for many would-be buyers. Further, younger generations are now competing with baby boomers for these properties, resulting in less affordability and availability. Be sure to do your research and remember that even with cottages, the location will impact the price significantly.
If you do find a cottage or property in your price range, that’s great news! Don’t forget though that there are a few extra expenses you may not have considered. Beyond furnishing, decorating and stocking it with all the fun cottage toys and watercraft (which you can likely find some of second-hand), you’ll also need to pay bills such as property taxes, utilities, insurance, and maintenance on top of any mortgage you may have. Depending on where you’re located, you might have to cover cottage or ‘lake association’ fees, septic expenses or even road access in winter. Investigate such costs before buying so that there are no surprises and you can budget accordingly.
If you don’t have quite enough savings to cover your regular home and living expenses PLUS a cottage down payment, you could consider using the equity in your home to help you achieve your goal. It all depends on the current value of your home and what is still owing on your current mortgage. However, you’ll still have to make sure you have enough income to cover the regular monthly bills for both your home and cottage. Your mortgage broker or lender can help you assess if you are eligible for a home-equity take-out and what steps are needed for this process.
If you’re thinking that cottage ownership might be out of reach, you still have a few options that might help you achieve your goals:
–Do a joint purchase. You can buy a cottage or recreational property with trusted friends, family or business partners. Just be sure to have everything legally documented. You’ll also need to carefully split up all chores, maintenance, usage and payment schedules.
-Rent it out. You can rent out your cottage for days, weeks or even months at a time, while putting aside your own time here and there until it’s more financially feasible to keep it for yourself.
-Build your own cottage. There is a lot of available vacant land on or near water that you can consider buying. While it may not be on the more popular lakes or rivers, you can still look forward to camping out on your property while you putter away at building it or until it’s more financially feasible to hire builders.
If owning a cottage is a big dream of yours, then let’s connect and start planning! While buying a cottage may not happen overnight, there are ways to start saving and preparing for this financial goal – starting today. As a certified, experienced mortgage broker and financial planner, I’m here to help you achieve financial success. Call today to book an appointment at 705-315-0516 and let’s dive in!