Financing a Cottage
Everyone knows by now that the Federal government and the banks have tightened up mortgage rules. What most consumers don't know is how the banks have changed the financing of cottage properties.
A few years ago a buyer could purchase a cottage for $1 500 000 conditional on financing. The bank would send out an appraiser to confirm the value. The appraiser would take into account the parcel of land, the land improvements such as the main structure, bunkie, boathouse, garage and any other out buildings. The appraiser would report to the bank and in most cases financing would be approved at the value of $1 500 000.
The percentage of how much down the bank required varied between financial institutions and the financial history of the buyer. This could have been 20-40% dependent on variables such as: property being located on a year round road or a water access property and if the structure has a full foundation and is winterized with a heating source.
The same buyer makes an offer on a $1 500 000 cottage. Conditional on financing or they may decide to make the offer unconditional (for greater bargaining power) with no financing clause, assuming they can easily finance the property and the appraisal will be close to the selling price. The bank sends out an appraiser to complete an evaluation and guess what? The banks no longer include the value of any outbuildings. Now excluded are any boathouses, detached garages, separate Bunkies, storage buildings, workshops, etc.
But sometimes speaking to the right Adviser at the Financial Institution can make all the difference, as some will go out to bat for you, and get the boat house included in the appraisal and some will take the easy way out.
One such Financial Adviser that will go out of her way and do everything possible to get the boat house and Bunkie included in the appraisal and thus offer you the best rate and terms is Niki Rushton from CIBC Bracebridge Telephone: 705-645-5213, 245 Manitoba Street, Bracebridge, ON, P1L 152
