Own a home away from home with as little at 10% down payment
This summer, many Calgarians will head out of the city limits and hit the open road. With cars and campers packed, many will set their sights on vacation property ownership. Those considering owning a vacation property can purchase one with as little as 10% down, even if the property they are purchasing doesn’t meet the standard access and utility requirements of a typical home.
On May 30th of this year, the Canadian Mortgage and Housing Corporation (CMHC) discontinued its second-home program, leaving many Canadians to assume that they could no longer purchase a rental property with less than a 20% down payment. However, Genworth Financial and Canada Guaranty, Canada’s other two mortgage insurers left their second-home products, including vacation properties, intact with minor modifications.
Genworth Financial’s vacation home program is of particular importance to the cottage/vacation home market in Canada, as it is the only mortgage insurance program that makes exceptions for particular features that you would typically only find in a vacation property.
The program allows a property to be purchased with as little as 10% down payment even if it does not have drinkable water flowing through the taps or have a permanent heat source – so a wood burning stove or a fireplace is perfectly acceptable as the sole method of heating the building.
Genworth not only makes exceptions for water and heat but also for access. While most insured homes in Canada must have reasonable road access, Genworth’s vacation property program allows for seasonal or boat only access, which is invaluable in areas like the Shushwap where there are many cabins that do not have any road access whatsoever.
Even if your vacation property doesn’t have road access, vacation properties can make far more sense financially than having a large motorhome or spending thousands on vacation retnals every summer. A $250 000 cottage only requires a $25 000 down payment and weekly payments of less than $300. Furthermore, a property is an appreciating asset. Unlike a motorhome that will depreciate as soon as you drive it off the lot, or a vacation somewhere nice where you are essentially renting a room for a short period of time, a vacation property can be sold, often for more than it was purchased for, which makes it a sound investment long term.
If vacation property ownership is on your mind as you’re headed out this summer, give an Accredited Mortgage Professionals (AMP) at Mortgage360 a call – we would be happy to help you make your vacation home dreams a reality.
Nolan Matthias holds a Bachelor of Arts Degree in Economics, is the co-founder of Mortgage360, and the author of The Mortgaged Millionaire.
