Helpful tips from BMO Bank of Montreal

Is buying a vacation property right for me?

6 questions to ask before making a move.

As the weather warms up, a cottage by the lake may sound appealing ― but is owning a second home right for you? If you’re looking to purchase a place, prices will vary greatly depending on where you’re searching.

There are several important factors to consider before purchasing a vacation home, so don’t let the allure of a lake breeze or the excitement of water sports keep you from thinking it through. First, ask yourself these six questions:

  1. What do you want in a cottage? Location and amenities will greatly impact the cost of your cottage, so create a list of must-haves and note anything you’re willing to bend on. For example, do you have a specific location in mind? Would you like a four-season cottage? Does it need to be right on the water? If so, decide on whether you’d prefer a small, quiet lake (for peaceful dockside reading), or a bigger body of water (so you can do some serious boating).
  2. How far are you willing to travel? For example, are you happy to commute a few hours each way every summer weekend? Would you consider buying in another province or country? If you can travel for longer periods of time, consider a place near Winnipeg, Montreal or Halifax ― which all have a more affordable housing market ― to save on costs. Or, look into a cottage south of the border. The median price of a home in Florida is about half the price of one in Canada, which might be why more than 500,000 Canadians currently own real estate in the Sunshine State.
  3. Can you afford it? While you may not occupy your cottage as often as your home, the financial considerations are similar. The combination of your mortgage, property taxes and utilities should not make up more than 30 per cent of your household income, advises Wendy Cooke, Regional Vice President, Personal Banking for BMO Bank of Montreal. Also, keep in mind that some remote cottage locations may not be eligible for a conventional mortgage. It’s a good idea to meet with a financial expert to review your finances and figure out what you can really afford before you start seriously looking.
  4. Would you consider splitting the bill? If you really want a vacation home but the price is out of reach, consider teaming up with a friend or relative to split on costs. Just remember that you may need to split time at the home itself, too. Another option is to try a fractional ownership, which lets you buy a block of time at a vacation home each year. While it won’t be yours and yours alone, with this set up, you won’t feel guilty if you can’t make it there every weekend. Plus, you often won’t have to pay property taxes and maintenance fees.
  5. Have you factored in all the other expenses? The purchase price of a vacation property is just the beginning. In addition to home ownership costs such as property taxes, maintenance fees and utilities, you may have to contribute to cottage association fees and invest in major improvements over the years. Then there’s garbage removal, septic tank repairs and weekend travel costs, just to name a few. Be sure to include these additional expenses in your budget.
  6. Have you considered all your options? While you may dream of owning a cottage, there are other ways to enjoy a waterside retreat at a much lower cost. You could try out a few different cottage rentals, which will give you a more realistic sense of how much time you’ll be able to spend at a vacation property. You may also realize that renting is an easier option.

To locate a BMO Mortgage Specialist who can help you with your home financing needs, visit

Photo: iStock

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