Buying a vacation home?

Thinking of buying a vacation home?

The month of May marks a time of change for those who own, or who wish to own, a vacation property. The snowbirds are returning from the sunny South and the Victoria Day holiday has historically been ‘opening weekend’ for many cottagers. It is also a time of year that sees a lot of turnover of vacation properties – whether North or South – which might make you wonder how you can achieve your dream of owning a vacation property.

Most people opt for cottages over homes, or condos in the southern states, simply because of proximity. The Royal LePage Recreational Property Report shows that standard waterfront recreational properties can range from the mid-$150’s on the East Coast to approaching $1million in Cranbrook or Vernon.

Things to consider when choosing a recreation property:

1.  What do you plan to use it for? – Strictly for recreation or are you investing for eventual return on investment, or as a deferred retirement residence?

2.  How often do you plan to use the property? – Is it located close enough that you can visit regularly (weekends) or is it further away?

3.  What do you want to do with the property when you aren’t occupying it?  – Are you interested in rental pools, fractional ownership, or both?

It’s much easier to rent a cottage on your own these days on Kijiji or other online directories, by creating your own website or simply by word of mouth.  There are also property managers who will find tenants and provide various levels of management – typically for 10% to 20% of the rent collected.  Renting any property, cottage or otherwise, can present many unpleasant challenges for landlords, so renting is not without potential headaches.

Research the locations you wish to consider, and consult with realtors and others who are familiar with the area. Zoning or legislation are things to look out for.  It might have an impact on your goals and budget.


There are three main financing alternatives for purchasing a vacation home:

  •  A conventional mortgage allows you to finance up to 80% of the purchase price of the home, thus requiring a down payment of at least 20%.
  • An insured mortgage makes it possible to finance up to 95% of the value of a second home.  If you happen to already own a cottage that has no debt on it, then you can also refinance that existing property for up to 80% of its value and get an insured mortgage to purchase another vacation home.
  • A home equity line of credit makes use of the equity built up in your primary residence to let you borrow up to 65% of the value of the home less the debt still owing on it.

Hot spots

Some signs to look for that an area is primed for recreation property growth:

  • Significant investment, in terms of people buying properties, developers building properties, and governments investing in infrastructure.
  • Talk to local realtors for their take on the latest trends in their area.
  • Proximity to other hot spots (such as Kelowna, B.C., or Canmore) can cause a ripple effect where locations farther out (such as Penticton, B.C., or Crowsnest Pass) experience growth.


Some tips for making sure buying a recreation property doesn’t leave you with unexpected sticker shock:

  • Be aware of closing costs, such as lawyer fees and home inspection fees.
  • A mortgage expert can help you navigate the taxation implications, both in terms of what taxes you have to pay up front, whether any taxes like GST can be deferred, what taxes are applicable if you rent out a property, and if any rebates/ write-offs are available.
  • Location and amenities play a role in determining ongoing costs, such as condo fees.

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