Life on the Lake – Buying a Cottage

A home away from home. Freedom to escape your normal routines and create amazing new memories. Who doesn’t want that? Life on the lake, or out in the trees, just has such an appeal that many people often find themselves looking to purchase a cottage to enjoy. I know I am constantly on the hunt for the perfect place.

A cottage could be a second home, a family destination, or even a great rental opportunity, depending on what you are looking for. But not all cottages are created equally. Let’s dive in and get you ready for life on the lake, or in the forest.

Cottages typically fall into 2 categories

Type A – Second home

  • Permanent foundations
  • Zoned residential, rural or seasonal
  • Kitchen, 3-piece bathroom, a bedroom, and a common area – at a minimum
  • Year-round road access or reasonable access with roads being serviced (privately or publicly)
  • Winterized with a permanent heat source. These can include baseboard, forced air, water radiator, radian, coal, propane, geothermal, or heat pumps. 
  • The water source is drinkable. Meaning well, municipal or lake water is filtrated by its own system.
  • Has good market appeal

Sounds like your type of property? Great! Here’s what you need to know:

  • The maximum loan amount is 95%, meaning as little as 5% down payment. 

That’s right, you could own a cottage for only 5% down!

So what if your property is a little more unique? No worries, that’s where type B comes into play.

Type B – Vacation home

All Type A requirements apply, except the following:

  • Floating foundations acceptable
  • Zoned residential, rural or seasonal
  • No permanent heat source required – wood stove or fireplaces are acceptable
  • Seasonal road use is acceptable
  • The water source does not need to be drinkable, but there must be running water.
  • Boat access only accepted. 

Falling in love with a type B? Great news, you may only need 10% down. 

What if your property doesn’t meet these requirements, you’re really looking for that rustic outdoors cabin feel? Type C does exist, so you may be in luck.

Banks may find the actual building on the land of no value to them so they are likely to treat this as bare land, which you would only get about 50% of the land value and typically we see them offer lines of credits in these instances.

Private lenders may include the value of the building and possibly go up to 80% of the value of the property including the cottage. 

So tell me, are you itching for like on the lake? Which cottage type appeals to you the most?

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