What You Need to Know About Financing a Vacation Home

Summer is on its way and thoughts turn to vacation property – but is that waterfront cabin within your reach? Mortgage broker Atrina Kouroshnia offers insight

Lava Rates
April 1, 2015

View from vacation home

With the summer travel season approaching, you may be eying a vacation property that would allow you to escape the everyday grind. Assuming you have good credit and you’re not maxed out on your primary home’s mortgage, that lakehouse or mountain cabin could be well within your reach.

Many Canadians purchase secondary properties in the US or elsewhere, and there are special mortgage and tax considerations that apply in those situations, so you’d want expert advice tailored to your specific circumstances. For this piece, we’ll focus on what you need to know about getting a mortgage on a second home within Canada.

Qualifying for a Mortgage on a Second Home

Most lenders will allow you to purchase a second home with as little as 5 per cent down, meaning you’d get a mortgage for the remaining 95 per cent. Lenders typically define a second home as a weekend getaway home or a cottage with year-round access that you or family members occupy. It could even be a property that you occupy half of the time (for instance, if you work in a different city than your primary residence, you might commute to your primary home on weekends and spend weekdays in your second home).

Qualifying for a mortgage on a second home is essentially the same process as qualifying for a mortgage on a primary residence. Lenders will look at your income, employment history, debt and credit history before qualifying you for a mortgage.

If your plans change in the future and you decide to rent out your second home, you could do that (provided your strata or homeowner’s association allows it), but you would not be able to use any of the rental income to qualify for that initial mortgage.

Insuring a Mortgage on a Secondary Home

With a down payment of less than 20 per cent, you’re required to have mortgage insurance. Last May, CMHC announced that they will no longer insure second homes. However, Genworth and Canada Guaranty will still insure one second home per owner.

If you’re considering purchasing a second home, a mortgage professional can run the numbers to see how much house you can afford and also calculate how the payments would fit into your overall budget.

Atrina Kouroshnia is an independently licensed mortgage broker in Vancouver, BC. She specializes in helping residents invest in their future through the purchase of their first home. She has a degree in Human Relations and Commerce, as well as past work experience in HR and real estate development. Atrina brings a holistic approach to the table when finding her clients the best mortgage available. She believes in complete transparency and ensures that her clients understand every detail of the process and all of their options.You can contact Atrina through her website,
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