It was a cold long winter and many of us can’t wait for the warmer weather to come. Being Canadian, most of us dream about owning a cottage. Owning a cottage is more of a “lifestyle” than it is an investment (like it is with your primary home). There are some differences between these two types of purchases so before you head out to find that perfect Bracebridge retreat, let’s go over a couple of key things to remember.
The basic facts
Your focus is on running away each weekend to your hideaway from the world, but once you start working with the numbers, you could be shocked. If you don’t have significant savings and an income to boot, you will find that most real estate agents and your finance person will recommend the “32% Rule” to you before you even head out to purchase anything. This 32% rule basically says that the total costs of both mortgages, and all the associated fees, plus the interest, as well as maintenance on both properties, should never total more than 32% of your annual income.
Think of the future
Even if you were to find a cheap cottage that is easy to purchase, the cost of owning one doesn’t end right there. You’ve got the mortgage, the property taxes, associated cottage association fees, then there’s the utilities and the maintenance plus higher property insurance than what you usually pay. The reason the insurance may be more expensive than you thought it would be is simple. If you plan to leave the property vacant for most of the year, it sitting there unattended can create a higher risk for theft and emergency repairs. We all know how harsh Canadian winters are and with that, comes the threat of bursting pipes, trees falling due to high winds and flooding. Without anyone being around to take care of these emergencies the damage claims can be extensive.
Before you begin
Below are a few key questions you should find out about before buying a cottage.
- Is the foundation solid? You need to know the condition of the foundation before you buy. If the cottage doesn’t have a stable, crack-free foundation, you can expect difficulties securing a mortgage or insurance. Not having a solid foundation is a risk just waiting to happen.
- Water-only access? Of course you want as much privacy and solitude as possible, but if the property is situated where there’s only access by water, you must consider emergency situations. Not fun to think about we know, but for example, what happens if there’s a fire or you need emergency services? How will these services get to you?
- The road to your property is maintained? Whether you intend on going to the cottage in the winter months or not, you need to find out what happens to the road that takes you to the property. Making sure that the road is maintained (snow removal in the winter) will ensure that you and others including fire and emergency services can reach you. You will also find the taxes could be slightly different as well depending on whether it’s a municipal road or a private road.
- Year round property? Does the property have heat and is it insulated? Some properties are meant for use only in the summer and do not come with a heat source or any insulation. The kind of heat source – electric or gas or propane – is another factor to consider.
- Where does your water source come from? Does the property get it’s drinking water from a well or from the lake? If it’s a well that is on the property, there’s always a possibility it has been contaminated by lack of use or cleaning, or chemicals or other dangerous substances. This is something you will definitely want to have checked out by a professional.
Making note of these key questions prior to you heading out to buy a cottage will protect you from any possible problems down the road. You don’t want to buy something and then find yourself in buyers remorse after owning it only for a couple of weeks. Make sure you find out before you sign. As experienced lawyers specializing in real estate law here in Bracebridge, it’s our job to help our clients through the process of buying and selling. We can provide you expert advice and do the legal leg-work to help get you through the cottage-buying process. Call us today at 1-705-645-8743
