Mortgage agreement
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How do we obtain a mortgage for a cottage?

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What are the requirements for obtaining a mortgage on a cottage?
—A Bewildered Borrower

In general, they aren’t any different than those for buying a house: good credit, a job, ability to make a down payment, etc. And it’s not necessarily any more difficult than getting a mortgage for a house.

“There are lots of financing options,” says Frances Hinojosa, a mortgage agent with Dominion Lending Centres. But it really depends on the type of cottage you want to buy. Most lenders will treat an easy-to-access, four-season, full-service lake house close to the city the same way that they would an ordinary home. But an off-grid, one-room shack five hours away from all civilization? “That would be a completely different financing situation,” says Hinojosa. This probably won’t come as a shock: Banks are cautious about backing major fixer-uppers, places that may be hard to resell, or cottages that appear to be prone to future disaster. 

The more remote, rustic, and ramshackle the cabin, the larger the down payment you’ll likely need—as much as 35 per cent, as opposed to five per cent for a home. Plus, mortgages on seasonal places usually have higher interest rates. But “having a client that’s extremely strong is really a plus,” says Pamela Valent of Mortgage Architects. “The same place could get approved or declined, based on the client.”

Find a mortgage professional who is familiar with cottage properties to discuss what you want to buy. Good news: Owning one property already (your home) may give you more standing.