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Cottage Math?

Cottage Math?


Spring fever has hit me hard!  And like most of you, I’m dreaming of a cottage getaway.  The smell of pine needles, a quiet sunset on a dock and the contentment that comes with a cottage by the lake.

Cottage-buying check list

  • Add up all the costs of ownership
  • Try to estimate how much costs will increase
  • Put money aside for the unexpected
  • Include the cost of mortgage insurance
  • Ask whether it’s a financial or lifestyle choice


If you are seriously considering buying a place by the lake you will have to take a hard look at what it will really cost to have a place like that of your own.

Cottages themselves come with a pretty high price tag, and that’s just the beginning. There’s taxes, maintenance, fees to dock and store your boat at a marina, maybe winter ploughing of your road, internet and TV — and the list goes on so you have to do your homework before jumping in. Do you actually have financial room right now to add the type of expenses that come with a cottage?

Many people buy a smaller cottage and renovate it into what they want, in order to save on the initial price tag.  But that can be an expensive project for a place that you only spend summer weekends at.  General maintenance is top of the list of cottage costs. There’s always something that needs attention.

A cottage is a luxury.

One owner estimates that someone spending 50 days a year at their cottage, costs them $250 per night fo the privilege.  You can’t always justify it economically, because it gives a new dimension to your life. Many feel that it’s the greatest purchase you can make from a spiritual perspective.

That may be true, but even a dose of spirituality has its price — and buyers need to beware. Preparation is everything and the owner shouldn’t be surprised by the carrying costs. You should try to get a feel for the projected increases using historical rates of growth, to make sure you can afford to carry the costs going forward. The same goes for municipal tax increases, utilities and insurance.

The cottage seems to have more unpredictable costs associated with it than a primary home as well, such as damage from a heavy winter snowfall or repairs to the road leading into your property.  Also, depending on how much of a down payment you have, you may be faced with mortgage insurance. Mortgage insurance on your primary home will not cover a second one as it is specific to each property. Canada Mortgage and Housing Corporation (CMHC) no longer offers second property mortgage insurance, but others insurers do.

So where does that leave you? Should you invest in a cottage? It depends what you are looking for. If the decision is based on lifestyle you might be willing to make some bigger trade-offs than if your goal is to use the cottage as an investment.  As an investment, a cottage is probably not a wise one, but the non-financial considerations are what you need to think about after you’ve quantified everything else. So if you’ve established you can afford it then you have to ask yourself if it is really worth it to you.

For some owning a cottage is just not worth it, and they will rent for the cottage experience instead.  But others find value in the family time and tranquility the cottage allows.

5 things to ask when buying a cottage

5 things to ask when buying a cottage


Buying a house in the city or suburbs can be complicated enough, but buying a cottage or vacation property outside of town requires even more due diligence. The questions for a realtor when you buy a cottage are somewhat different from those when buying you house in the city.

For example, in town, you probably wouldn’t ask if the water coming out of the tap is drinkable. Nor would you wonder if the plumbing was hooked up to the sanitary sewer. But these are exactly the sorts of questions you should ask when buying a cottage, plus a few more.

 1.Always get an inspection.

Cottages are usually occasional residences and so may not be as properly built or maintained as they should be. This is why every purchase should be conditional on a satisfactory professional home inspection. If the cottage has a wood-burning stove or fireplace, then a certificate must be requested from a Wood Energy Technical Transfer specialist, to confirm that the system was installed and is operating correctly.

2.Is the water drinkable?

There are two areas of potential concern when it comes to water – the quantity and quality. Is there enough to satisfy family needs and is it good enough to pass the local health department requirements. A separate inspection may be needed by a well specialist. If nothing else it gives you an idea of what it would cost to replace the well if it fails.

Ask the sellers for these things:

    • Confirmation that the well, the pump and related equipment have performed adequately during the Seller’s occupancy;
    • A potability certificate from the local health authority, confirming the water is safe to drink;
    • Confirmation that there is an adequate rate of flow for normal household use;
    • Provision of a well driller’s certificate, if available; and
    • The location of the well.

3.How’s the septic system?

Septic systems present their own difficulties because it is usually difficult to tell during an inspection how long the system may last. The replacement cost can be up to $20,000, especially if there are stringent environmental regulations in effect in your area. The buyer should arrange for their own separate inspection of the system itself.

Buyers should ask for confirmation that:

  • The system was installed with all necessary permits;
  • The system has been adequately maintained;
  • The seller is not aware of any malfunctions;
  • The seller will provide copies of any inspection or approval reports in their possession;
  • The seller agrees to pump out the tank at their expense prior to closing; and
  • There are no work orders on file with the Ministry of the Environment or the local municipality.

4. Shoreline

In a regular house you often have a yard that faces on a street, and you know that you don’t really own the property from the sidewalk to the street.  But what about the shoreline?  Do you own the property all the way up to the waterline?  In some instances you do, and in a lot of cases there is a shoreline allowance that you do not own.  Many people are very surprised by the anwer to the is question.  Make sure you know where your property line ends when it comes to the shoreline.

The first 66 feet fronting onto the lake is typically owned by the local municipality and is referred to as the shore road allowance. Although you have access to the water, you can’t stop others from using it. Nor can you build anything on that 66-foot piece of land. Many cottagers have found out afterwards that either all or part of their cottage was built on land that they do not own.

You may be able to buy the land from the municipality, but it is a process. If you can get an up to date survey from the seller, this should answer your questions. Also inquire to make sure that any required permits were obtained to build a dock or boathouse, as there is no automatic right to do this. In all cases, make sure you have title insurance, which should assist with most of these types of issues.

5. Access to the cottage

If you do not have year round access by a city road, then you must ask how you get from the road to your property. If it is a private right of way over a neighbour’s land, you must understand the terms of this agreement to ensure it is year round access and it is clear who is responsible for maintaining the road.

If there is no registered right of way, it can be a nightmare, with owners fighting over who has the right of way and who owns it.

For all of these reasons, it is recommended that buyers work with a local real estate agent who should be familiar not only with each of these issues, but more importantly, will be able to recommend the professional inspectors and town officials who can satisfy a buyer’s concerns.

By being properly prepared before buying a cottage, you will avoid unwelcome surprises after closing.