Second home and recreational property mortgages:
Do you have questions about buying and being approved for a mortgage for a second home or recreational property in Canada? We are here to help by providing you with the best information and expertise to ensure you make the best and most informed decision possible.
If you currently own a home and are looking for information on purchasing a new home and selling your existing one. Please click here for in depth details and examples of your options.
There are a range of interpretations between lenders in Canada as to what constitutes a second home and also how they underwrite and approve them for our clients. We always ensure that we position your new purchase in the most advantageous way for you with the best lender to meet your goals. When we are working with our clients we will typically see second homes fit into one of three unique categories:
*Recreational home for you and your family
*Home for your children to live in while they are attending post secondary education
*Home for your elderly parents
How to obtain a mortgage for a second home or recreational property:
Our first step is to determine which of the above three categories your purchase fits best. Once we determine the category the next question is the amount of down payment you have budgeted:
*5-10% down payment or
*20% down payment or more
With both options, mortgage rates and terms will typically be identical, with the only difference being with less than 20% down payment we will have to obtain CMHC insurance.
As it relates to your income, with a second home the qualifying is very similar to a normal mortgage qualification except we will have to approve your new mortgage while still factoring in your existing debts including current home debts. The biggest typical challenge that we encounter when approving your second home mortgage is that no rental income can be used to qualify for the second home. This means that your income will have to be strong enough to cover your current home, all of your other debts, and your new home payments within the CMHC or lender required debt servicing guidelines.
Some common client second home mortgage questions include:
Can I purchase a rental home as a second home or use any vacation rental income to qualify for my mortgage?
*Unfortunately one of the main conditions of a second home mortgage is that it cannot be used to purchase a rental property and as such we cannot include any rental income.
Am I able to purchase a second home in the city that I live in for my elderly parent or child attending school?
*This is an interesting question, with 20% or greater down payment, the answer is yes. With less than 20% down payment the answer is also yes, but CMHC will often ask for us to add the parent or child to the mortgage to confirm that it is a home for them and not a rental property.
*It is important to note that if you are purchasing in another city for the same purpose CMHC will often not require your parent or child to be added to the mortgage.
Am I able to obtain a mortgage for a vacation home that has fractional ownership, a hotel structured rental option or a mandatory rental pool?
*Unfortunately lenders in Canada generally do not offer mortgages for these types of ownership structures.
Am I able to purchase a seasonal access second home within this program?
*Yes, through one of the mortgage insurers we are able to approve seasonal access homes, depending upon the home and the access to it the minimum down payment can vary.
How we can help you:
We want to answer your questions and create custom innovate and custom mortgage and purchasing solutions and options for you. As a part of our service we will outline your mortgage pre-qualification amounts and ranges along with your payment options in advance of your purchase. We have years of experience in explaining the process and mortgage nuances when we are working with clients who are purchasing a second home or recreational property. We will work with you to understand your goals of second home or recreational home ownership. A mortgage prepared and presented properly for your second home can mean the difference between your approval and decline for these specialized mortgages. We would be happy to connect with you and answer any questions that you have, please feel free to contact us via phone, apply online, or with our online contact form.
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