July 27, 2018

Cottage Ownership is typically a second home for most people.  Somewhere to get away from the hustle and bustle of the city, the sun, fun on the lake and the tranquil sunsets.

After a few years of renting a cottage and getting away with the family, somewhere along the way, you might feel that it is time for cottage ownership.  Before you take that leap to purchase that secondary residence, ask yourself a few questions:

  1.  How often will you go to the cottage?  When you own a cottage, you want to spend as much time there as possible.  Unless you plan on being there for at least 2-3 months a year, the cost of running a second household might not be worth the benefits of owning your own place.
  2. What is your budget and do you have a pre-approved mortgage?  Know your budget and stick to it.  If you fall in love with a cottage and it is outside your price range, this can cause undue financial stress.  Instead of relaxing at the cottage, you may be stressing about making your cottage payments.
  3. When you purchase a cottage, your most probably want to purchase lake toys like canoes, boats or ATVs.  Have you factored these items into you budget?  Also there may be lakes that prohibit motor crafts on the lake.  So if you are planning on water skiing on your lake, clarify before you buy.
  4. Do you have a reserve fund.  Unfortunately things may happen at the cottage that are out of your control, like a leaky roof or a dated septic system.  These items will have to fixed right away and could cost quite a bit to fix, so keep that in mind too.
  5. Will it be a shared ownership of the cottage?  Cottage ownership could be quite expensive on your own, so you may consider making a purchase with your friends or family.  If you decide to do this, ask yourself, how will you divide your weeks of stay? This should be discussed, like a business partnership before purchasing so no assumptions are made, and misunderstandings can be eliminated.  Also with shared ownership, you will have to discuss payment for repairx that pop up, labour and supplies.
  6. Are you planning on renting it out?  If you are planning on renting out your cottage, look for something that is set up to be rental, in that way, you might already have established guest for some guaranteed income.  If renting your cottage is your ultimate goal, check with the local by-laws as some locations prevent you from renting out your cottage.
  7. Can you get insurance for it?  Like your home, you will have to make sure you can get insurance for your property so call your insurance broker confirm.
  8. If you want to make upgrades, do your research before you purchase the property, there may be by-laws limiting what types of extra buildings, you can build on your property.
  9. Are you planning on going to the cottage in the winter?  Are the roads plowed in the winter or is it a shared road where you would have to get together with your neighbours to get it plowed?  Or would you just be taking your snowmobiles into the cottage?
  10. Is there a fire department of emergency services close by?  This will affect your insurance and safety while at the cottage.

Answer these questions so that you are well informed before you making your purchase and jumping into Cottage Ownership.  For more cottage information, call us at Rice Insurance.  We will be happy to help you answer any questions before you make your purchase to make sure you are covered and put your mind at ease as you purchase your dream cottage.