More and more families today are finding the need for a secondary residence, whether to meet special family circumstances and work demands or just the desire for a vacation or leisure property to get away from it all. Cottage financing could be just the help you need to help you purchase your dream vacation home.
Unlike traditional financing where the home buyer utilizes the equity from their principal residence to purchase a second property, the financing under a cottage financing plan is fully secured by the second property.
OK, you’ve found your dream home but suddenly there are some questions and concerns from your financial institution and lawyer over seasonal access roads, potable water sample, survey, and septic system. You may be required to increase your down payment and the mortgage interest rate may be higher… WHAT WENT WRONG?
An Example: Your bank has a condition that you cannot have the water supply coming from the lake.
If families are refused a cottage mortgage from their bank, many often the mistake of thinking they cannot turn anywhere else for a second opinion. What the bank will often not tell people is that you can go to a mortgage broker and they will have a lot more options for a cottage loan.
Example of Other Conditions are:
- Does the cottage have a well
- Septic System
- Electrical source
- Heating source
- Year round access
- Seasonal Property
- Island Properties
Lending criteria has changed substantially in the last few years for a cottage mortgage. In the past borrowers were having to come up with at least 25% of their own funds to put towards the property for the down payment. If 25% was not financially feasible for you at that point there was always the option of refinancing you principal residence up to 90% to pay for the cottage or at least allow you to come up with the down payment.
Today, Lending institutions are allowing clients to finance secondary properties up to 100%!! This will allow you to have that waterfront property or secondary home now rather than later. Cottage property can be financed up to 90%.
You may be wondering what the difference is between secondary homes and vacation/cottage property? Well in most cases they are the same but to a lender there are a few distinct characteristics between the two that will allow the lender to decide if they are going to lend up to 100% or 90%.
· 100% Financing available with a max amortization of 40 years.
· Potable Water.
· Year round road access.
· Permanent foundation.
· Maximum loan amount: – $600,000.
· Up to two units Maximum.
· Available for purchase and refinance.
· 90% Financing available with a max amortization of 25 years.
· Property characteristics same as Secondary Home except for the following:
· Water source needn’t be drinkable.
· Foundation may be floating, For example, sitting on blocks.
· Property need not be winterized.
· May have seasonal access (road not plowed during winter or only accessible by boat).
· Maximum loan amount: $350,000 (exceptions will be considered on a case by case basis).
· One unit maximum.
At GLM Mortgage Group, we determine your needs and wants and then source out lenders, including all the major banks and find the right lender to suit your needs….a far greater range of options.
For families that have good credit…chances are we can get the same rate or better than the bank was going to offer, and our services are free so what do you have to lose? In all, when searching for cottage financing, we provide many more options for your family mortgage needs.
Many families are under the misconception that mortgage brokers only specialize in working with families that may have had financial problems in the past. The GLM Mortgage Group is here to also provide first class cottage mortgages at the best rates to help your family meet your goals and making your dreams a reality.
Get your financing in place before beginning your search! Don’t fall in love with a property and find out you are not able to receive the cottage loan. Although, it is sometimes a little more confusing to purchase a cottage property, by discussing your situation with a qualified mortgage specialist, there is usually a way to complete the purchase.