| Many of us have fond childhood memories of dad | | | | more people. With a constant and steady increase |
| loading up the station wagon or van and heading | | | | in demand for this type of properties, the |
| out of town for a long week-end. | | | | Canadian Mortgage And Housing Corporation has |
| For some the destination was a lakeside campsite, | | | | determined that the market is such that it is |
| but for many it was the summer cottage or | | | | willing to insure lenders against potential losses. |
| cabin by the lake. For others it was a Winter | | | | This is welcome news for those who have been |
| activity that brought with it the long-anticipated | | | | longing to get a recreational property but did not |
| excitement of driving up to the favourite | | | | want to wait until retirement to come up with the |
| mountain and throwing open the doors to a | | | | downpayment. |
| modest old ski lodge that one could call home for | | | | All Canadian Mortgage And Housing Corporation's |
| the next week or so. But unless one was lucky | | | | products are permitted to be used with the |
| enough to inherit dad's cabin, the thought of | | | | Homeowner Mortgage Loan Insurance and since |
| purchasing one piece of recreational paradise can | | | | most major institutional lenders already have their |
| be daunting for most young families. | | | | own recreational property mortgage products, |
| With prices still on the rise and demand for | | | | consumers have the flexibility to choose the type |
| vacation homes brisk notwithstanding the general | | | | of financing that is right for them. |
| slowdown in real estate, there are a few bright | | | | However, as with most types of financing, there |
| lights for homeowners looking to pick up a second | | | | are some key limitations that is important to be |
| home or recreational property. | | | | clear on. The purpose of the Homeowner |
| The Canadian Mortgage And Housing Corporation | | | | Mortgage Loan Insurance is to make it more |
| has instituted recently a new program that will | | | | feasible for consumers to purchase a second |
| provide Homeowner Mortgage Loan Insurance for | | | | home. It is important to distinguish between a |
| borrowers with more than one residential | | | | second home and a rental property. The |
| property. This means that Purchasers can now | | | | Homeowner Mortgage Loan Insurance is not |
| obtain a mortgage insured by the Canadian | | | | intended to allow an investor to purchase a rental |
| Mortgage And Housing Corporation on a | | | | property with five percent down. The guideline |
| recreational property with as little as five percent | | | | states that at initiation the real capital asset that |
| down. | | | | secures a mortgage insured by Canadian |
| Traditionally getting institutional financing for a | | | | Mortgage And Housing Corporation must be |
| vacation property was a challenge, because | | | | intended for occupancy at some point during the |
| lenders typically based their lending decisions on | | | | calendar year by the borrower or a relative of |
| the risk of reselling this type of properties. As | | | | the borrower on a rent-free basis. If a rental |
| many second homes are located outside urban | | | | income is anticipated from the property at a |
| centers and, more often than not, in remote rural | | | | future date, it will not be calculated for the |
| or coastal areas they might have limited resale | | | | purpose of assisting the Purchaser to qualify for |
| potential, which from a mortgaging point of view | | | | the loan. |
| increased the risk of financing. To mitigate this | | | | The location of the property is not restricted to |
| risk, lenders would require borrowers to put up | | | | major resorts or popular vacation spots, but |
| more money down - as much as thirty-five | | | | there are some general requirements that apply |
| percent or more, in fact. Even well-known and | | | | as well. For instance, the recreational property |
| popular destinations such as Whistler, British | | | | must be suitable for and available for year-round |
| Columbia required a minimum of twenty-five | | | | occupancy. Properties that are constructed for |
| percent downpayment. | | | | seasonal use or have seasonal access are not |
| But lifestyles are changing and these changes | | | | eligible. As such, vacation cottages located on an |
| affect decisions that real estate consumers make | | | | island must have year-round bridge or ferry |
| regarding how and where to live. So the Canadian | | | | access. And finally, timeshare interests, life leases |
| Mortgage And Housing Corporation has made a | | | | and properties in rental pools are not eligible. |
| move to put vacation properties within reach of | | | | |