With an increasing number of Canadians looking to invest in vacation properties, many are considering the benefits of owning a getaway home. These properties offer not only a place for relaxation and family moments but also the potential for wealth-building. And the good news is that accessing mortgages for vacation properties has become easier, even for non-winterized or remote locations, thanks to low interest rates.
When searching for the best mortgage for a vacation property, it is important to understand that different lending criteria apply compared to primary residences. Second or third homes have their own set of requirements and may qualify for a minimum of 5% or 10% down payment. However, certain categories of vacation and secondary homes will require a higher down payment of 20% or more. These properties are categorized differently and receive different treatment from lenders.
Moreover, the type of cottage you are interested in purchasing also affects the mortgage options available to you. Different types of cottages, such as those categorized as year-round accessible or seasonal, have different requirements and may require a higher down payment or receive higher interest rates.
Fortunately, there are various ways to incorporate down payments for your vacation property. One option is through mortgage refinancing, where you can use the equity in your current property to fund the down payment. Another option is a Home Equity Line of Credit (HELOC), which allows you to borrow against the equity in your home. Lastly, a reverse mortgage is an option for those aged 55 and older, allowing them to access the equity in their home to fund the down payment.
In Canada, there are innovative tools available to streamline the mortgage process and ensure accuracy. Whether you are a first-time buyer or an experienced investor, reaching out for complete information and a quick mortgage pre-approval process is always a good idea.