B.C. vacation properties

It’s looks like we will be spending another summer close to home this year, so 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.

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

The average price for a vacation home in British Columbia is expected increase by 13% in 2021, according to a survey from Royal LePage. The biggest challenge is extremely low inventory and high demand.

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

The first step is always going to be a mortgage pre-approval but, let’s take a look at some of the options for mortgage financing.

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% down payment on the portion of the home value above $500,000

As a side note, 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.

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 (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.

Up to 95% financing is available for owner occupied properties all across Canada including hotel condo units but these units must be high ratio insured.

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 at 1-888-561-2679.

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About the Author

April Dunn is the owner and a Mortgage Broker with The Red Door Mortgage Group – Mortgage Architects. She has been assisting clients to purchase, refinance or renew their mortgages for over 20 years.

April has experience as a Credit Union manager, a Residential Mortgage Manager with a large financial institution and as a licensed Mortgage Broker. By specializing in Strategic Mortgage Planning she has the tools available to build a customized mortgage plan, with the features and options that meet your needs.

April provides a full range of residential and commercial mortgage financing options for clients all over the province of British Columbia and across Canada through the Mortgage Architects network.

Contact e-mail address: [email protected] or by phone at: 888-561-2679.

Website:  www.reddoormortgage.com

The views expressed are strictly those of the author and not necessarily those of Castanet. Castanet does not warrant the contents.

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