Vacation / Second Home
Vacation and recreation property mortgages now available
The main difference between financing for a second home and a rental property is that the rental income cannot be taken into account when qualifying for a mortgage for the purchase of a second home. The second home purchase program was introduced for the purpose of the individual wishing to purchase a second home in order to cut down on their commuting time. Also eligible under the second home purchase program is where the mortgagor’s relative is living in the 2nd property on a rent-free basis. As well, this program is ideal for a person wishing to provide a house for a child away at university or for vacation home purposes.
The applicant can only have 2 owner occupied properties under the second home program since the second home program allows you to purchase the 2nd home with 0% downpayment. Any additional properties you wish to purchase must qualify as an investment or rental property where a minimum downpayment of 20% is required.
Downpayment Required
The second home and certain types of vacation or cottage properties can be purchased with as little as 5% downpayment. In order for the vacation or cottage property to be purchased with 5% down, the property must have a permanent foundation below the frost line; zoned residential, rural or seasonal; include a kitchen, 3-piece bathroom, bedroom, and common area; year-round road access; winterized with a permanent heat source; water source and a septic system or sanitary sewer.
Properties that are not winterized or have seasonal access will be considered for purchases with a minimum downpayment of 10%. In this case, the maximum loan amount will normally be $350,000.00.
US residents may also purchase a second home or vacation property in Canada with a minimum downpayment of 35%. The applicants must be able to provide the downpayment from their own resources and a solid credit history based on their US credit bureau