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 will need mortgage financing for that cabin or cottage.
Depending on the property type, you may require anywhere from 5% or 10% down payment or more.
Vacation properties vary greatly in their marketability and lenders consider this when reviewing an application. Lender’s check to see if the property is accessible year-round? They check to see if the property has a source of potable water and heat to keep the pipes from freezing in the winter? There has to have a solid 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 there is less than 20% down payment, the insurer will want 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:
Type A: They are zoned as residential, rural or
seasonal and provides central heating and year-round road access.
Type B: These properties do not provide central heating however it must have a seasonal road.
Down Payments vary depending on the property type.
Uninsured Type A and B properties: The applicant must have a
minimum down payment of 20%. 15% must come from the applicant’s own savings and the remaining 5% can be from a gift from an immediate family member.
Insured Type A: An applicant must provide a minimum of 5% down payment from their own savings and gifted down payments are acceptable (Genworth insured only)
Genworth Insured Type B: A minimum of 10% down payment must come from their own savings and not gifted funds.
If owning a vacation property is something you desire, chat with our trusted mortgage broker Eva Neufeld. She has owned vacation property for over 24 years and can share the ins and outs.