Cottage season has finally arrived and the appetite of wishful cottage owners is hot. We recently helped a couple turn their dream of owning a cottage into a reality, and then some.
Long-term clients Al and Lydia approached us a few months ago with their desire to buy a cottage. They had seen our signage stating “Buy a Cottage for 5% Down”, deemed a second home. They had been working hard over the past couple of years to save an extra $16,000 for 5% down payment and closing costs for the purchase of their dream cottage. They were excited about an affordable $250,000 waterfront property they had found, which was being sold privately.
We sat down, ran some numbers and the initial appointment resulted in some disappointing news. Despite their strong incomes, they couldn’t qualify for the second home purchase because they had two sizeable mortgages in their names. Their primary residence, and, they had also co-signed for their son’s first matrimonial home a couple of years ago. With the new ‘stress test’ in effect, they had to qualify at 4.64% and the ratios just didn’t work.
However, we found a way to make it work… that’s what we do! As it turned out, their son and daughter-in-law now had enough work history and high enough incomes to qualify for their own mortgage. We were able to refinance John and Sally’s house and remove Al and Lydia from title, freeing up enough room in their debt service ratios to enable them to afford the cottage with a high-ratio mortgage. Success #1!!
John and Sally were pleasantly surprised by the appraised value of their home and we were able to get them enough money to finally finish their basement and backyard. This saved them from having to put these expenses on a high-interest Line of Credit. Success #2!!
Given the massive increase in property values in Centre Wellington lately, we took a look at what else we might be able to do for Al and Lydia. They had always wanted to own a property that they can earn income from, but they didn’t know how they would ever be able to do that. Turns out, their property value had appreciated very nicely and it made sense for them to refinance their principle residence as well. We were able to get them enough money to purchase an additional cottage for $300K with 20% down, which they will be renting out starting this summer. Success #3!!
They were able to debt-service the three mortgages and are thrilled about achieving this type of property ownership, which will play a large part in their retirement security as they approach their golden years.
With some creative thinking, passion and dedication, we were able to help these two families achieve their dreams and beyond! Contact us to see how we can help you achieve your aspirations of cottage and/or rental property ownership. We love what we do, and it shows!