It’s that time of year when cottage life is calling your name. You’re itching to go up north, enjoy the outdoors, and escape your responsibilities at home. Sure, renting an Airbnb is nice, but owning your very own cottage is even more exciting! You have free reign to make it your very own home-away-from-home to create new memories year after year. But where do you start and how do you prepare to buy a cottage? To help you get started these are a few things you will want to think about first and foremost.
Make sure you get pre-approved for your mortgage ahead of your hunt
Before you find the cottage of your dreams, head on over to view it, and then fall in love with the property, make sure you get pre-approved from a reputable mortgage broker, like me, Darren Robinson. That way, you can ensure you can afford the monthly payments and have the advantage if there is a bidding war. The housing market is blazing hot, so you want to make sure you’re prepared before getting your hopes up about calling that dream cottage your very own. When you know the amount you are approved for in advance you will have more confidence in making that offer knowing you have the funds behind you.
Understand the different types of mortgages
In addition to your primary mortgage, there are also investment property mortgages and second mortgages. It can be challenging to obtain mortgage approval for an investment property or a second home depending on your financial situation. Lenders view you as a greater financial risk when you apply for a second mortgage, so they tend to require more documentation and larger down payment than you paid on your first home. Finding the right mortgage is more than just comparing rates. An experienced mortgage broker will explain the pros and cons of the various options available and should be able to assist you in deciding which options are best for you specifically. Additionally, they can help you gather all the documents needed to verify your income and show where the down payment funds are coming from. Plus, it’s free to work with a mortgage broker, so why not take advantage of the professional advice?
What are the extra costs?
The cost of a cottage is similar to a home in that you need to cover the down payment, regular mortgage payments, insurance, property taxes, land transfer taxes, utility bills, and regular maintenance. However, many other extra costs can pop up. For example, cottage or cabin owners may have to pay cottage association fees, septic/environmental expenses, and winterization costs such as rooftop snow removal or winter road access. Insurance on a cottage can also be costly, as many insurance companies recognize the risks involved when a property is vacant for long periods of time. And, if you’re thinking “well, I’ll rent it out when I’m not using it.” insurance companies don’t love to hear that either because the risks are higher when you have many people coming and going from your property. Finally, don’t forget that your cottage will need furniture, home and kitchen essentials, tools, and all the fun toys and gadgets that make cottage life so enjoyable.
If you’re buying a second home, what’s your plan for the future?
Will you be renting it out when you aren’t there?
How much money are you willing to put into renos?
Will it become your retirement residence in the future?
Will you buy your cottage with a group of people?
What region are you planning on buying in?
Do you want to build your own cottage?
There are so many options to consider when buying a vacation property!
And, once you do buy your cottage educate yourself on how to properly winterize your cottage
Owning a cottage is a lot of hard work with the many maintenance tasks you must do. You may not be visiting your cottage very much, or at all, during the winter months. Make sure you do your due diligence and bring all your summer stuff inside and think about installing home security to keep an eye out for any break-ins – by humans or wildlife. You can also install smart home systems to regulate the temperature through an app on your phone. That way if you’re heating system goes down, you will get an alert so your pipes don’t freeze. It’s also a good idea to hire someone local to check on your property while you’re away if you’re not within a short driving distance.
Whether you’re buying a cottage in Muskoka, the Kawarthas, or Niagara regions, be sure to do your research and remember that even with cottages, the location will impact the price significantly. If owning a vacation property is your life-long dream, then let’s work out a plan to make it a reality. As an accredited mortgage broker and a financial planner, it’s my job to help you assess your current financial situation and work out a plan of action to help you save money and reach your financial goals – including cottage ownership! Give me a call at 705-315-0516 to get started or click here to set up an appointment to chat with me.