Getting Financing for your Cottage

Getting financing for your Ontario cottage is something that follows the same process as acquiring financing for your primary residence, but is not as easy to get. Lenders will often require a far more stringent check of your finances and will require your property to fit a more rigorous test of marketability in order to unclenching the funds that will see you sipping margaritas lakeside.
 
Since a cottage is not your primary residence, lenders will be a lot more fastidious about how much you can borrow comfortably and also about how marketable the place you are eyeing really is. They will look at criteria such as whether it is on a big or small lake, whether it is in a developed cottage country community or whether you are truly in the wilderness.
 
Lenders will also want to know that you have access to a good source of water as water problems can severely impact the resale value of a second home. Next, lenders will want to know whether it is a three-or-four season cottage. Most lenders prefer four-season places as they are more versatile and easier to resell.
 
In short, lenders want to know that you are buying a place that has value for them in case you default on your mortgage.
 
Since the CMHC rules have changed and they no longer insure second homes, if you don’t have enough of a down payment, then you will have to get your mortgage insured by a private lender.
 
Naturally the easiest way to acquire a second home is to pay for it outright – but let’s face it, it is a very small segment of the population who can actually afford that. However, if you are seriously considering the purchase of a second home, do yourself a favor and make sure that you are easily able to carry the costs of a second mortgage as well as the costs of maintaining a second home.