Are cottages worth the investment?

Are cottages worth the investment? This is a question many potential cottage owners must ask themselves before diving into the real estate market. The answer depends on your unique situation and preferences, including your budget, commitment to maintenance, and plans for use. For some, buying a cottage is a great decision, while for others it may be better to hold off. Here are some factors that will play a big part in your cottage ownership experience!

Costs of purchasing

The costs of buying a cottage itself can be hefty. Since the pandemic, cottage prices have really been on the rise. When people began to appreciate the freedom of being outside after a series of long lockdowns, many Canadians started rushing to buy cottages to make the most of the outdoors and the space it offers. However, it’s important to consider the costs of these properties.

Buying a cottage is like buying a second house, and in some cases, the prices reflect that. Depending on location, size, and age, many cottages cost as much as our primary residences. Another big item to think about is the cost of the accompanying mortgage. Assuming a cottage is your second property, you will need to provide a larger down payment to assure lenders you can afford two mortgages. Down payments of 20 per cent and above are often the standard in this case. You might also be working with higher interest rates, since this is a riskier investment for the lender. Mortgages are one of the first things you will have to consider before deciding what makes cottages worth the investment.

Maintenance responsibilities

Cottages come with maintenance responsibilities that can add up depending on their age and location. Many newer cottages are equipped with modern appliances and upgrades, and are unlikely to require intensive maintenance over the next few years. However, older properties might have more basic features that will soon be in need of replacements. For example, cottages with original roofing or plumbing are likely going to need attention before too long. These types of maintenance costs can be expensive and you will need to ensure you can support them. 

Winter maintenance can also be pricey for cottage owners in Canada. We are no stranger to harsh weather conditions, but they can be extra intense out in cottage country. It’s not unusual to return to a cottage in the spring to find some damage from the winter that needs to be repaired. You should prepare for the possibility of seasonal fixes that might be required to maintain the property.

Options for renting out

Are cottages worth the investment for those who plan to rent them out? Cottage owners can certainly bring in some money over the busy summer months, when people are eager to escape to the lake for a small vacation. This can help pay for the mortgage and maintenance costs that come with owning a cottage property. However, it’s important to calculate how much income you can realistically expect to generate. Cottages are only high in demand throughout the warmer months of the year. From October to May, there will not be many people looking to rent out your cottage property. Plus, if your cottage isn’t accessible during the winter months, it might be sitting empty for about half of the year. If you are relying on making money from renters to help support your ownership, you need to think carefully about seasonal availability and demand.

Your own vacation plans

Purchasing a cottage is a dream for people who want to spend their days relaxing on the beach or hiking along park trails near their home away from home. For some, there is nothing better than being able to take a vacation within their own province at a property they own. On the other hand, you don’t want to feel tied down to your cottage as your only vacation option. Some people find they feel obligated to use their cottage as much as they can, even if they might otherwise like to explore somewhere new. It’s easy to feel like you should be using the property whenever you can in order to make cottages worth the investment. If you have other places you want to travel to, be sure you won’t be giving them up in order to buy a cottage!

The decision to buy a cottage depends on your personal finances, location, and preferences. There is no right or wrong choice, but it is important to compare your options carefully before proceeding in either direction. If you think a cottage is in your future, we recommend getting in touch with a mortgage broker early to start discussing your plans! We can give you the information you need to ensure your entry into the cottage real estate market is a successful one.

If you have any questions about your mortgage, give us a call at Centum Home Lenders! You can reach us at 506-854-6847, or get in touch with us here.