Buying a Lakefront Cottage?


Considering buying a lakefront cottage in 2020? Has owning a lakefront cottage been a lifelong dream of yours? Are you wanting your children to experience the fond memories you have of summers at the lake? Wondering if this year is the time to make that dream a reality?

Here is are a few things to consider before you buy.

Financing a Recreational Property

There are two ways to finance a cottage or recreational property if you already own a home.
The first would be to apply for a mortgage on the cottage itself. Depending on the cottage, the mortgage lender would determine what type of financing it would be eligible for depending on if it fell into the Type A category or the Type B category.

The Type A cottage would be one that was heated, had a foundation, and year-round access, essentially, a home. The lenders would, therefore, have similar requirements as if you were mortgaging a family home, such as requiring a 5% down payment.

The Type B cottage would be one without a foundation and did not have year-round access. Lenders usually require 20 -35% for the down payment. Interest rates can be higher on cottage properties as well.

The second option for financing would be refinancing your principal residence and using the equity to purchase your cottage where up to 80% of the value of your home can be refinanced.

Lenders may also allow a combination of both.
It is always best to start with a meeting with your mortgage professional to get pre-approval first, as they will have to look at your credit score, debt ratio, assets, and income levels. This will give you direction of what price range of cottages you can afford and be looking at.

Once you find a cottage you want to buy and have an accepted offer, then the lender will still have to agree to lend you funds on that particular cottage. Is it a type A or a Type B cottage? What are the other costs associated with this cottage such a taxes, home owners’ fees, and required improvements?

Things to Keep in Mind when Buying a Lakefront Cottage

The number one question you need to ask yourself when considering buying a cottage is, what do you want to do with the lakefront?

Would your family be into motorized water sports? If so, you will need to look at lakes that are large enough, not very rocky and allow gas engines on the lakes.
Is swimming going to be your family’s main activity? If so, you may want to consider a solid shoreline that is not very rocky, or better yet, sandy, and gradually getting deeper.
Or are you looking for peace and serenity? Is privacy, on a small,
non-busy lake your priority?

Secondly, you need to decide what level of rustic or amenities are you comfortable with? Are you comfortable with using a compostable toilet and a wood stove? Or are you looking for a home away from home? Are you willing to buy a fixer-upper and put the sweat equity in to get a cottage to your preferred level of comfort?

Thirdly, how far are you willing to travel to get to your getaway? Is it unlimited, as long as you find the cottage you desire? Or is there a limit to how long you want to drive, where it would no longer be convenient as a relaxing retreat. There are also some cottages and lakes that have long access roads to even get to the lake from the nearest community and amenities, so taking into consideration the level of seclusion you are comfortable with is also important.

Cost to Consider When Investing in a Cottage

Buying Costs
Many of the costs incurred while going through the buying process is the same for a cottage as it is for a residential property. Such as the costs for a lawyer and a house inspector, septic inspector, and water testing will normally be the same unless the inspectors add on mileage due to the remote location of the cottage.

You can most certainly expect insurance rates due to being a potentially remote property further from the fire department’s access. The mortgage interest rates may be marginally higher due to it being potentially a second mortgage.

Road Fees
With most lakefront cottages being in a rural area, this usually means fairly low taxes. Though some homeowners’ associations can have the cottage road fees added on to the municipal taxes, so the taxes may be high. Once you verify on the property’s actual tax bill you will be able to see the break down of road fees, versus property taxes.

You will also need to verify with the seller or your agent what is included in the annual road fees. Is the amount just for regular maintenance? Does it include winter plowing and occasional bush clearing? Some homeowners’ associations will vote to increase the road fees temporarily if they need to do any major road or bridge repairs.



Many cottages often have older wells and septic systems, if they have any at all. So depending on the age and condition of these, you may want to make sure you can install a new one and what the potential costs may be before you buy. Some cottages have fairly small lots, so to install a new septic, you may have to have a specially designed system that will fit the small lot, which in turn means a more expensive system.

An older cottage may not be finished inside or may not have insulation, so to extend its usability, you may want to factor in another heat source and increasing its energy rating. This would increase the resale value as well.

If you are unable to use your cottage year-round, then you may need to learn to or factor in a budget to have the water lines drained for the winter so that your plumbing does not spring a leak.

Waterfront of any kind is usually a sound investment, whether it is a vacant lot or a residential property. There are always buyers out there looking for waterfront property.
The key to desirability is the quality of waterfront and the usability of the body of water the property fronts on. Most waterfront seekers want waterfront they can access; something with a solid shoreline, no marshland or scrub brush.

Lastly, be sure to know the value of the surrounding properties so that you do not over-invest in the cottage. Even cottages are subject to “location, location, location” being a key factor in determining a price, so know the top end of your cottages resale value so that you stay within those figures to protect your investment.