Buying a Cabin or Vacation Property?

 

If you’re dreaming of getting out of Fort McMurray for the weekend to relax by the lake with all the comforts of home, chances are you’ll need mortgage financing for that cabin or cottage. This is called second home financing or vacation property, and requires a minimum of 10% down payment. 

 

These types of properties can vary greatly in their marketability which is an aspect the lender looks at in every application. Is the property accessible year-round? Is there a constant source of potable water and heat to keep the pipes from freezing in the winter? Is there a foundation to keep critters from making homes under the house? Is there a kitchen and bathroom to allow it to be considered fully functioning?

 

The insurer wants to see year-round accessibility, potable water, a source of self-sufficient heat and a foundation. Essentially a cottage or cabin that does not need someone to look after it on a daily basis. If the cottage or cabin doesn’t have what the insurer wants to ensure marketability, a conventional mortgage loan will need to be placed on the property.

 

Conventional mortgages are mortgages with a down payment of at least 20%. If you’ve fallen in love with a winter access only property, with a wood stove and no source of water, be prepared to put at least 35% down and have your options for lenders (and rates) limited.

 

There is one lender who uses Genworth for their cabins to be insured and they do it a little different than the other lenders as mentioned above with 10 percent down payment needed. There must be no intent to occupy these properties year round. Properties must be in a recognized vacation area and the broker should be prepared to submit evidence of this, such as lakefront or proximity to major recreational amenities (e.g. ski facility). Not applicable for Second Home or Vacation Property requests where the property, otherwise, meets standard guidelines. The lender will decline or require default insurance through Genworth Financial Canada, where marketability of property is questionable.

 

Property Criteria for 10 percent down cabin property:

• Must have a minimum of a kitchen, 3 piece bathroom, bedroom and common area.
• Seasonal access only is acceptable (i.e. road is not plowed or only accessible by boat).
• No permanent heat source required (i.e. wood stove, fireplace, stove or heat blower).
• Water source need not be potable, however running water is required.
• Indoor plumbing can be chemical, portable or holding tank.
• Foundation may be floating if normal for area (i.e. sitting on blocks).
• Property must meet minimum square footage requirements of 850 to qualify for conventional financing. Valuation restricted to 5 acres of property.
• Maximum Loan Amount
• Insured: $350,000
• Maximum Property Value
• Insured: $999,999.99
• Borrower Eligibility
• Insured
• Minimum bureau score of 680.
• Sufficient income to service all debts including carrying costs for principal residence.
• No prior bankruptcy or judgments, no R3s in the past 24 months.
• No 3rd party guarantor other than spouse is permitted for purpose of qualification.
• No gifted down payment.

This one lender with the Genworth cabin program allows financing on a cabin without the requirements of a fully serviced cabin to have financing available with as little as 10 percent down payment.

 

Call Whalen Mortgages today your top trusted mortgage brokers in Fort McMurray to get started with your new cabin purchase, we know mortgages off the back of our hand and can make sure we are getting you what you want! Our team and staff are always available to help answer any questions you have and get your mortgage approved asap. 780-715-7533