Dreaming of moving to your cottage and turning it into a year-round residence? Maybe you’re getting ready to retire or you have a remote job that lets you work anywhere. Whether it’s a lakeside retreat or a cozy cabin in the woods, moving to your cottage permanently can be a rewarding lifestyle change but there are several things to consider before you make your move.
Here’s a guide on the things you’ll need to consider and how using a Home Equity Line of Credit (HELOC) is a great way to finance the necessary renovations. Working with a mortgage broker can also help you find the best rates and options to make the transition easier.
Assess The Current Condition Before Moving To Your Cottage
Before making any plans, start with a detailed assessment of the cottage. Seasonal properties often lack features that make them suitable for year-round living, such as:
- Heating and Insulation: Ensure the cottage is properly insulated and equipped with a reliable heating system to keep you warm during winter months.
- Plumbing: Verify that the plumbing is suitable for freezing temperatures to prevent pipes from bursting.
- Electrical System: Make sure the electrical system can handle the increased demands of everyday appliances and devices.
- Structural Integrity: Inspect the foundation, roof, and overall structure to ensure they can withstand harsh weather conditions.
A professional home inspection can help identify any issues that need to be addressed before you move in permanently. It’s also a good idea to find a reliable contractor sooner rather than later. During the summer months, it may be hard to find someone to make your renovations when there is high demand from seasonal cottagers. Work with them to make a realistic schedule for necessary repairs and upgrades so you know the ideal time to put your home on the market.
Check Zoning and Permits At Your Cottage Site
Before you start renovations, confirm that local zoning regulations allow for permanent residence in your cottage. Some cottages are located in areas zoned specifically for seasonal use, so you may need to apply for a zoning change.
Also, depending on the extent of renovations required, you may need building permits. Contact the local municipality to understand what is needed to bring your cottage up to code as a full-time home.
Plan the Necessary Renovations
With the assessment complete, outline the renovations required to make the cottage livable year-round. Figuring out your budget is key to knowing how much you will need to borrow to make your cottage the perfect place to retire or enjoy working remotely. Go through the list, below, to get an idea of what lies ahead:
- Will your cottage need to be winterized?
- Will the cottage need future upgrades due to future mobility issues?
- Is there enough storage space for your belongings, plus the storage your cottage already uses? Or do you have a plan for downsizing?
- Is there enough room for guests (friends, family, grandkids, etc.)?
- Do you have year-round access? Are the roads in good shape, and is there regular maintenance?
- Is the septic system up to snuff? If you use well water, does the well need upgrading? Will there be a problem with pipes freezing?
- Is there reliable cell service? Cable or satellite? Broadband internet?
- Power outages are more common in cottage country. Will you need a generator or an alternative energy system (solar or wind)
Create a realistic budget that includes all anticipated expenses. This will help you figure out how much financing you’ll need for the project.
Finance The Upgrades For Moving To Your Cottage With a HELOC
Before you start on this journey, you’ll need to take a realistic look at your finances. Take into consideration the cost of the upgrades you’ll need and the moving expenses involved. Investigate any tax implications including looking into capital gains. Prepare a budget for living expenses (if you’re planning to retire, calculate based on having a lower income).
If you’re looking for a way to finance your cottage renovations, taking out a home equity line of credit (HELOC) on your primary residence is a smart option. HELOCs usually have lower interest rates than credit cards or other high-interest loans, making them a more affordable choice. While a full mortgage refinance might offer even lower rates, a HELOC is perfect if you’re not sure exactly when you want to start the renovation.
Before deciding on the best way to access your home equity, it’s a good idea to talk to a mortgage broker. They can help you find the financing option that best fits your needs.
How Does It Work?
A HELOC allows you to access the equity in your home as needed. Unlike a loan where you receive a lump sum, a HELOC gives you the flexibility to borrow only what you need, when you need it. You only pay interest on the amount you use, not the entire credit limit, which helps keep costs down. Plus, you can pay off the balance at any time without a penalty.
Why Choose a HELOC Over Credit Cards or Loans?
Using a HELOC can save you a lot of money compared to using credit cards or other loans. Why?
- Lower Monthly Payments: With a loan or credit card, you usually have to pay at least 3% of the total balance every month. For example, a $50,000 credit card balance would require a $1,500 monthly payment. With a HELOC, you only need to make interest payments. For the same $50,000, you might only pay around $135 per month.
- Pay Only for What You Use: A HELOC allows you to borrow as much or as little as you need. You’re not locked into a large monthly payment like with traditional loans, giving you more financial flexibility.
What If My Primary Home Doesn’t Have Enough Equity?
If you don’t have enough equity in your primary residence, you might still be able to use a HELOC on your cottage. If your cottage is a year-round property with road access, lenders can loan up to 95% of the property’s value, leaving you with only 5% equity remaining. Just keep in mind that the cottage should be in good condition and marketable, as your lender will want to ensure it can be easily sold if you default on the mortgage or HELOC. Talking to a mortgage broker may also offer you options from different lenders that are a bit more flexible with their mortgage qualifications.
If You Think You’re Ready to Make That Big Move To Your Cottage, Give Me a Call.
Moving to your cottage permanently is a big decision that requires careful planning and investment. By thoroughly assessing the property’s condition, planning necessary renovations, and using a HELOC to finance the work, you can turn your seasonal getaway into a comfortable, year-round home.
Give me a call and we can go through your financial plan. I’ll help you find the best interest rates and options for a HELOC so that you can start getting ready to make your move. Contact me today at 705-315-0516, or book a consultation. You’ll be ready to enjoy the tranquillity of cottage living in no time!