• Mortgage On A Cottage

    When the weather is warm we got a lot more requests for help to get a mortgage on a cottage. It makes sense – why rent a cottage when you can buy one

    The most common way of achieving this dream of purchasing a cottage and getting a mortgage on a cottage, is by refinancing your home. If you have enough equity in your home, you can extract a portion or in some cases, the entire purchase price of the cottage?

    What are the main limitations? As with any mortgage, you need verifiable income and good credit to get the best terms, but one of the biggest limitations is that you can generally only refinance up to 80% of your existing home and use that money go purchase (or help purchase) the cottage.

    For example, let’s say you are interested in a $400K cottage and your existing home is worth $900K. That means the maximum mortgage you could place on that home is 80% of $900K = $720K. Let’s say you already have a mortgage with a balance of $320K. That means you could increase the mortgage by $400K, use the funds to purchase the cottage with no mortgage, and still remain below the refinance limit of 80%.

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