When searching for property in Canada’s cottage country, researching the area and pre-arranging your mortgage financing can give you a real leg up on the competition.

According to the 2008 Royal LePage Recreational Property Report, the competition is out there and they are serious about it.

The survey found that 61% of cottage owners and those who plan to buy a recreational property feel that buying a cottage is a better long-term investment than buying stocks, bonds or mutual funds. Young investors are also becoming more savvy. Nineteen percent of young professionals said that they are currently planning or considering a cottage purchase.

Once you’ve committed to joining the ranks of those searching for that little piece of heaven, come back down to earth long enough to consider some factors that are key to making a good decision:

• Why? Answering this question will often provide answers to other key questions. If, for example, you want friends and family to visit, the size of the cottage will have to accommodate that goal. Will zoning laws let you add on to an existing cottage if need be? How will taxes be affected?

• Where? How far are you willing to drive each weekend? Do you want a deep lake for your boating activities, or a secluded spot on a remote lake to use as an escape? Are you willing to make compromises in location to achieve your goal?

• Can you access the property in the winter? This could be a stipulation with financing and insurance.

• Do you intend to use renters to offset the cost of the mortgage? This can affect your financing and insurance.

• Most importantly, cost. How do you intend to finance the property?

If you finally find that perfect place on the lake but leave the financing to be worked out later, someone else armed with a pre-approved mortgage can be sitting by the fire beside your lake next summer – all because they did their research.

Financing a recreational property can be subject to more stringent conditions than a primary property, mainly due to the perceived risk involved. This is something that needs to be discussed with your financial advisor as conditions can be unique to the type and location of your property. In addition, if you decide to obtain mortgage financing for over 75% of the price of the property you will require the use of either CMHC or Genworth for mortgage insurance. Home insurance companies also vary in their requirements when it comes to insuring second homes. Having this knowledge in your pocket before you begin your search can help ease the way to a smoother purchase.

With Canada’s retail banks tightening their belts in response to the recent US crisis, obtaining a mortgage for a second property from a conventional lender could become much more difficult. However, with the existence of knowledgeable, alternative lenders like certified mortgage brokers, buyers shouldn’t be deterred from taking advantage of the excellent mortgage rates, and increased supply of recreational properties.

For more information on mortgaging your cottage contact our mortgage centre at www.canadianmortgagesinc.ca