Owning a vacation property might be within reach if you have been dreaming of getting out of Edmonton for the weekend to relax by the lake or in the mountains with all the comforts of home?
Chances are you’ll need mortgage financing for that cabin or cottage.
Depending on the property type for your second home financing or vacation property, it may require anywhere from 5,10% down payment or more.
These types of properties can vary greatly in their marketability. This is an aspect the lender looks at in every application. Is the property accessible year-round? Does the property provide a constant source of potable water and heat to keep the pipes from freezing in the winter? Is there a foundation to keep critters from making homes under the house? There must be a kitchen and bathroom to allow it to be considered fully functioning?
If you put less than 20% down payment, the insurer wants to see year-round accessibility, potable water, a source of self-sufficient heat and a foundation. If the cottage or cabin doesn’t have what the insurer wants to ensure marketability, a 20% down payment will be required.
Properties are typically zoned into Type A or Type B properties:
Type A: Zoned and used as residential, rural or
seasonal; provides central heating and year-round road access.
Type B: Central heating is not required however seasonal road
access is acceptable.
Down Payments vary depending on property type.
Uninsured Type A and B properties: The applicant must provide a
minimum down payment of 20% from own resources. 15% must be provided from the applicant’s own resources, gifted down payment are acceptable
Insured Type A: An applicant must provide a minimum equity of 5% from their own resources, gifted down payments are acceptable (Genworth insured only)
Genworth Insured Type B: A minimum 10% from your own resources and no gifted down payments.
If owning a vacation property is something you have been thinking of, chat with our trusted mortgage broker Eva Neufeld. She has owned a vacation property for over 20 years and can share the ins and outs.