How to Get a Mortgage for a Muskoka Cottage
Owning a cottage in Muskoka is a dream for many, but securing financing can be more complex than buying a traditional home. Whether you’re looking for a seasonal retreat or a year-round residence, lenders have specific requirements based on the type of property.
In this guide, we’ll break down how to get a mortgage for your Muskoka cottage and what financing options are available.
1. Mortgage Options for Cottage Buyers
The type of mortgage you qualify for depends on the property’s classification:
🏡 Type A Cottage (Year-Round Property)
- Functions like a primary residence.
- Insulated for all seasons with a permanent heat source.
- Easier to finance with as little as 5% down.
- Qualifies for CMHC mortgage insurance (if down payment < 20%).
🌲 Type B Cottage (Seasonal Property)
- May not have winterized plumbing or year-round road access.
- Lenders consider it riskier → Requires 20-35% down.
- No CMHC insurance available.
- Mortgage rates may be higher.
2. Down Payment Requirements for Muskoka Cottages
Your down payment depends on the property type:
| Cottage Type | Down Payment Required |
|---|---|
| Type A (Year-Round) | 5%–20% |
| Type B (Seasonal) | 20%–35% |
Important Considerations:
- The more remote or seasonal the cottage, the higher the down payment required.
- If you put less than 20% down on a Type A property, CMHC mortgage insurance is required.
- A bigger down payment can help secure a lower interest rate.
3. Mortgage Qualification Factors
Lenders will assess:
✅ Credit Score: Higher scores (680+) get better rates.
✅ Debt-to-Income Ratio (DTI): Your mortgage + debts should not exceed 44% of income.
✅ Property Location: If the cottage is too remote, traditional lenders may not finance it.
4. Alternative Financing Options
If you don’t qualify for a traditional mortgage, consider:
🔹 Home Equity Line of Credit (HELOC): Borrow against your primary home.
🔹 Private Lenders: Higher interest rates but flexible terms.
🔹 Seller Financing: Some sellers offer financing to qualified buyers.
Need expert mortgage advice for your Muskoka cottage? Let’s chat!
stephanie@therealtydeal.com