Dream cottage? Is it time?

Photo: Tatyana Tomsickova

Vacation or Secondary Home Program

No longer just for the wealthy, more Canadians than ever are purchasing second homes. 

The Vacation or Secondary Home Program, offered by mortgage insurers, now makes it easier than ever with low down payment requirements.

Here are the types of properties that can be covered under these programs.

Are you dreaming of a summer or winter cottage for weekend getaways? Eligible properties must be owner-occupied and located in good marketable areas, with evidence of re-sale demand. Restrictions vary among insurers: One insurer will allow seasonal access and does not require the property to be winterized, while another will not allow seasonal access. Properties located on an island must have year-round bridge or ferry access.

Perhaps you are considering a place for your children to live while they attend university, or a condo in the city to avoid a hectic commute, or a home for your elderly parents who are on a fixed income. These scenarios are possible, as long as the family members are living there on a rent-free basis.

Up to 95% financing is available for owner occupied properties all across Canada. 

An important note here: These programs are not available to purchase investment properties, time-shares, or similar properties that offer rental pools for owners.

There are maximum mortgage amount restrictions that apply to properties where you are purchasing with less than a 20% down payment. The maximum amount across Canada is $600,000, other than Metro Toronto, Metro Vancouver, and Metro Calgary which is $750,000. That amount is reduced to $350,000 for properties that only have seasonal access, or are not winterized. 

There are many financing options available through a wide range of lenders. The requirements for mortgages on secondary and vacation home properties vary greatly from lender to lender, so you will want to do your research of the choices available in the marketplace.

Rather than waiting many years to save enough to purchase a second home, you may be able to access the equity in your principal residence to finance the purchase. This involves a cash-out refinance of your property and again, there are many options available. Other down payment options may include a second mortgage on your current property, borrowed funds, or gifted funds. 

With current interest rates at all-time historical lows, now could be the time to get serious about your dream to own a vacation property or to assist a family member.

This article is written by or on behalf of an outsourced columnist and does not necessarily reflect the views of Castanet.