For instance, for the higher ratio mortgages where financing above 80% loan to value is required, the insured mortgage programs will allow you to finance a second property as a vacation home and even have two different categories that they will consider.
The first category, or type “A” property can receive financing up to 95% loan to value on property purchase and refinance. This includes properties that would cover off the basic characteristics as a typical residential home such as winterization, all weather roads, and can also accommodate up to two living units.
The second category, or type “B” property can qualify for up to 90% financing, but only on the purchase of a vacation home. The home does not have to be winterized and does not even have to have access by roads, which can be the case with cottages that are on islands found on certain lakes.
There are a number of other qualification requirements for the insurer as well as the mortgage company that will be providing the actual financing. But as long as your credit and cash flow meet the minimum financial thresholds, there is a good chance you can get the higher leveraged financing that is backed by a mortgage insurance program.
For vacation home mortgage requirements where there is no more than 80% leverage or loan to value required, there are both bank and private mortgage options that can be considered.
Being that private mortgage financing is more short term in nature, this can be used for a purchase, refinance, or debt consolidation and provide the time required to arrange long term financing either one or two years down the road when you can meet the qualifying criteria of a bank or institutional lender, or you have upgraded the property to meet an “A” lender’s requirements.
The bottom line here is that there are a large number of options and financing strategies available if you are looking to acquire, upgrade, or refinance a vacation home in Canada.
One way to assure you on the right path to vacation home financing is to work with an experienced mortgage broker who will be able to take your particular situation and quickly provide the most relevant options and cottage financing strategies available to you.
If you require a vacation home mortgage for a primary or secondary residence and would like to better understand your options or different approaches you can take, We suggest that you give us a call and speak directly to a member of our team and get a free assessment performed.