Making The Cottage Dream A Reality

By: Sylvia Smith

Making The Cottage Dream A Reality



Have you been dreaming of owning a cottage for some time and has the pandemic made that desire stronger?   Are you thinking that social distance at the cottage would be a breeze and being able to enjoy the tranquility of nature would help take your mind off the crazy times that we are living through?


Cottage country life is definitely very different from city living and is not for everyone but once you have the cottage bug it is hard to let go.  So how can you go about making your cottage dreams a reality?  The biggest hurdle to cottage ownership is how do you make it happen financially.  If you own a home you may be surprised how easy it is to financially be able to purchase a cottage.  I work with a number of Mortgage Brokers that can guide you and advise if you can afford to purchase of cottage.  Plus with our current record low-interest rates, you may be surprised how much you can afford.


When you are seriously starting to consider buying a cottage or vacation property there are a number of steps that you should consider before you actively start looking.



Step 1 – Determine What Your Goals Are

Cottage Ownership, waterfront cottage




When people are considering purchasing a cottage they tend to buy for one of the following reasons:


1. A place to escape the city on weekends and summer vacations

Can you imagine yourself lounging on the dock with family in friends on hot summer’s day with the lake breeze cooling you off and hearing the call of the loons in the distance?  There are many ways of making this dream a reality from regular ownership, shared ownership with family or friends, to fractional ownership.  There are many ways to buy a cottage or vacation property to make that dream a reality.


2. Own a cottage as a real estate investment and at the same time diversify your investment portfolio

Owning a cottage can be a great investment.  There is always plenty of demand in Ontario for cottage rentals.  Cottages are a great investment because demand for cottage property keeps going up and there are so many lakes to build new cottage properties so the rule of supply and demand ultimately pushes up prices.  Many Toronto homeowners capitalize on the equity in their homes to purchase a cottage or investment property and if you purchase the cottage as an investment the added bonus is that you get to enjoy your investment too.

3. Long term plan to retire to the cottage

Buying a cottage or vacation property now allows you to lock in on current cottage prices plus they can rent out the cottage to earn income and help with the expenses when they are not using the cottage.   Once you are ready to retire you can rebuild or renovate the cottage into a home for year-round living.


4. First-time buyers investing in real estate that can’t afford the Greater Toronto prices.

Toronto real estate prices are expensive and not everyone can afford to purchase a home in the Greater Toronto Area.  Many people plan to rent in the Greater Toronto Area and purchase a cottage or vacation home elsewhere and either use it for their own enjoyment only or also rent out to help with carrying costs.



How you plan to use your second home is a huge decision and it is wise to spend some time pondering the various options, and goals before you take the plunge.  As your goal will ultimately impact financing, insurance, and where you choose to look for your cottage or vacation property.



Step 2 – Get Your Finances in Order – Get Pre-Approved For a Mortgage


It is critical to understand how much you feel comfortable spending on your cottage and how much you can afford.


Speak with your Mortgage Broker or bank as qualifying for a mortgage for a cottage is different than getting a mortgage for a primary residence.  Getting your finances in order is absolutely critical before you start looking for a cottage property.  Once you have clarity on what you can afford and that your financing is in order then it is time to start looking.  Work with a realtor that has cottage experience and they will be able to educate you and guide you on where and what time of properties are based on your goals.



Ongoing Costs and Maintenance to Consider

Buying a second home, vacation property or cottage isn’t only about the price you pay for the property. There are a number of other considerations to keep in mind:
Home Insurance – property insurance will most likely be more expensive if you are not living in the second property on a full-time basis.  You will also pay a premium if the property is located far from emergency and fire services.   Also, keep in mind that most absentee home insurance policies still require someone to check on the property every 30 – 69 days.

Water – depending on where you buy there is a likelihood that you will not have access to municipal water so you may need to maintain a well or water treatment equipment.

Garbage – garbage and recycling services vary by community.  If the community does not offer garbage pickup services you may find yourself paying to drop off garbage at the local garbage dump.
Maintenance – property maintenance outside city limits can be a little more involved than in the city. In addition, to the standard home maintenance items such as plumbing, roofing, electrical, eaves troughs, furnace, and air conditioning maintenance, etc.  Don’t forget to plan for grass cutting, gardening, tree maintenance, costs to service septic tank, water well, water treatment, dealing with critters.  It is also a good idea to have someone you can have on call when you aren’t at your vacation property.
Heating and Hydro –  There are many more heating options in cottage country than in Toronto or in a city.  Your cottage may be heated by a fireplace, electrical baseboard heaters, and if you have a furnace it may run on propane or natural gas (which entails regular propane delivery).  Of course, you can’t forget that you will have a hydro bill as well.

Internet – Prepare that depending on where your vacation property is located your internet service may not be as reliable and may likely be more expensive.  As much as we may not be happy with the big Toronto internet providers they definitely provide way FASTER service and for less money.  Be prepared that you may only have 1 or 2 internet providers to pick from in rural areas.
Property Taxes –  property taxes can vary greatly across Ontario.  Lakefront properties typically have higher property taxes compared to rural properties and depending on the community can also be way more expensive than Toronto property tax rates.
Capital Gains Tax  –  If your vacation property isn’t your primary residence, you’ll have to pay capital gains tax when you sell.  


Cottage relaxation hammocks

Buying a cottage or vacation property is definitely more involved than buying a home in the city.  Working with a seasoned realtor that has firsthand experience will be the key to your success in finding your dream vacation property.  If you have any questions or have decided to start your search for your dream second home please reach it would be my pleasure to help.