Is it a cottage or cabin?

Rather than COVID-19 slowing down the real estate market, due to pent-up demand or the desire to get away from crowds, the vacation property market is hot in many areas.

Retirees and baby-boomers are driving vacation property purchases but here in B.C. professional couples and families are also buying vacation homes.

Are you dreaming of a summer cottage on the water or a cabin the woods for weekend getaways or to get away from the crowded city during this pandemic?  

Many are accessing equity in their primary residences to make these purchases but there is also a great insured mortgage program available to make your dream of owning a vacation property a reality with a little as a five per cent down payment required.

Here are the types of properties that can be covered under this program.

Type A Properties:

• Must be owner-occupied or occupied by an immediate family member
• Located in good marketable areas with evidence of re-sale demand.
• The property value must be less than $1 million
• The maximum mortgage amount allowed is $600,000 for most of Canada
• Maximum of one unit
• For properties valued up to $500,000 a minimum down payment of five per cent is required.
• For properties valued over $500,000 and less than $1 million – five per cent down payment is required up to $500,000, with an additional 10% payment on the portion of the home value above $500,000

This program can also have other uses. Perhaps you are considering a place for your children to live while they attend university, a condo in the city to avoid the hectic commute or to help buy a home for your elderly parents who are on a fixed income.

This is 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. (These programs are not available to purchase investment properties, time-shares or similar properties that offer rental pools for the owners.)

Type B Properties:

The same details are required for these properties as above except for the following:

• The property does not need to be winterized
• Seasonal access is permitted (i.e. road not plowed during the winter)
• A minimum of a 10% down payment is required for these types of properties.
• Properties located on an island must have year-round bridge or ferry access.
• The maximum mortgage amount is $350,000.

There are many financing options available through a wide range of lenders.

The requirements for mortgages on secondary and vacation home properties can vary greatly from lender to lender so you will want to make yourself aware of all of the choices available in the mortgage marketplace.

You’ll want the best possible financing options for your new real estate investment. 

Instead of waiting many years to save enough to purchase a vacation 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 there again are many options available.

Other down payment options may include a second mortgage on your current property, personal savings or gifted funds (Type B property purchases do not allow for gifted down payments.) 

With our current interest rates very low, now might be the time to get serious about your dream to own a vacation property.

If you would like to explore your options so you can enjoy a new vacation home this summer, please give me a call to discuss.

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