With warmer weather on the horizon, folks start thinking about getting away from the city on weekends to lounge by the lake…their lake if possible! Owning a cottage is part of many Canadians’ dreams; this type of purchase is more of a “lifestyle choice” rather than an “investment” that is associated with buying a home. It’s worth noting there are some distinct differences between the two purchases, so let’s take a look at some of the key areas before you buy.
The cold hard facts
You dream of hammocks and gorgeous sunsets while enjoying your dock, but once you start crunching the numbers you might be in for a surprise. Unless you’ve got significant savings and/or income, most realtors and financial experts recommend the “32% Rule” before any purchase. This rule spells out that the entire costs of mortgages (your existing home and the cottage), all the fees, interest AND the maintenance on both properties, should not be more than 32% of your annual income. Now that gets right down to business doesn’t it?!
Facts for the future
The cost of a cottage doesn’t just end at its list price. You’ll also have mortgage payments, property taxes, cottage association fees, utilities and maintenance – which can add up quickly. Also, be prepared for higher property insurance than you may be used to. Why? If you plan to leave the property vacant for most of the year it can create a higher risk for theft and costly repairs. Harsh Canadian winters pose the threat of pipes bursting, or falling trees, and no one being around to take care of it! Also, let’s not forget about the other basic costs like furnishing the property, appliances, bedding, and any “toys” like a boat, ski-do or canoe – these are also part of the cottage lifestyle.
Nitty-Gritty Questions to Consider
Beyond the affordability of a cottage, there are also other considerations that may impact your decision to buy. We’ve listed a few key ones here:
- What condition is the foundation in? If the property doesn’t have a stable foundation, prepare yourself for potential difficulty securing a mortgage or insurance. You need to know its condition straight from the beginning.
- Does it have year-round access or is it water-only access? As much as you want to have the solace and privacy of a water-only access to your cottage, be sure you’ve thought about potential emergency situations. For example, what happens if there’s a fire or you need emergency services?
- Is the road well maintained? Even though you might not be going to your cottage in the winter months you’ll want to ensure the road that the cottage is on is well maintained. Making sure that the cottage is easily accessible, (by snowmobile, someone looking in on your property, fire trucks, emergency services, etc.) should be a high priority on your list. Taxes could be a bit different as well if it’s a municipal road or a private road.
- Does it have heat? Is it insulated? The type of heat source is another factor to consider, not just for insurance or mortgage purposes, but for your year-round enjoyment.
- Is there a safe water source? If the well that comes with the cottage has contaminated water by chemicals or other dangerous substances, it’s possible that you could be on the hook to do the
By knowing these specific purchasing points before you start looking for your cottage, you are inevitably protecting yourself from pitfalls and ‘buyer’s remorse’ down the road. Make sure to ask these important questions so that you have all the information about what you’re buying before you make your offer. As experienced lawyers specializing in real estate law here in Parry Sound, it’s our job to help our clients through the process of buying and selling. We can provide you expert advice and we do the legal leg-work to help get you through the cottage-buying process. Call us today at 1-705-746-6444.
