NEWS UPDATE: Federal Government Raises Insured Mortgage Cap to $1.5M, Expands 30-year Amortizations
Mistakes You Can Avoid While Purchasing A Cottage
Everybody dreams of owning their own cottage, to use especially in the warm, sunny summer holidays. There is no nicer feeling having a second home by the lake, and being able to come back from a jetski ride to a large, cozy home to relax in, on a quiet weekend afternoon.
Before this dream becomes a reality, however; there is a potentially agonising purchase process to go through. It is always a large investment, and sometimes the buyer may question if the price is worth it.
So what are the mistakes you can avoid making, before the contract and cheques are signed?
If you know you will need to borrow money to make that purchase, do bear in mind that getting the loan is extremely difficult. The bankers who will lend you the money will want to know if the cottage will be accessible all year round. If the answer is no, then the options will be limited and the rates will be much higher. Lenders will also want to know whether the location of the cottage is reasonable, as well as any other owners sharing the deal with you. Other questions that may arise are whether the place is rentable during the other seasons of the year, when you are not around.
It is also important that if you will require financing, that the offer is conditional on that. You don’t want to be stuck with a cottage you cannot pay for!
In addition to acquiring the financing, there are always additional costs that come with a house purchase. The long term financial implications cannot be at the back of your mind, because the bills will soon be coming once the cottage is purchased and has been used for a few months. These bills will include the obvious mortgage payments, utilities and maintenance costs, property taxes, and insurance. If you are ready for all of this, perfect – you are ready to be a cottage owner!
Finally, one must think about their other regular financial commitments. Family expenses must be a priority and the cottage must be secondary. If you have kids going to school, another house or apartment that you have bought or are renting, and all other basic bills – these must come first! These cottages are usually a bonus for any major savings you may have, and if not a risk then it can definitely be an extra purchase. You and your family must first be financially comfortable in order to be able to think about additional, and seasonal purchases.
It is understandable that many families use cottages mostly as a financial investment, a property they intend to use, upgrade and then sell a few years later for a higher price. This is definitely a good plan to have in mind. So long as the location is popular, easily accessible and has many benefits, it can always be easy to rent out during the fall and winter seasons for families who enjoy different weather away from their city home.
And that is it for me this week! I genuinely hope you make the best decisions for you and your families. If you’d like to discuss this through, I will be more than happy to give you any additional advice.
Related posts
