How to Buy a Vacation Home or Cottage in Ontario
Step 1. Define Your Goals
People generally buy a cottage or vacation property for one of the following reasons. They want to:
…escape the city on weekends and summer vacations. Picture lounging dock-side with your friends or family or heading to the beach in between visits to wineries and craft breweries. From regular ownership to shared ownership with friends to fractional ownership with strangers, there are plenty of ways to buy a cottage or vacation property to help you enjoy those precious summer months.
….earn income and diversify real estate investments. Owning a cottage or vacation property is often a great way to earn Airbnb income (depending on the community) and if you choose right, watch the value of your property climb. A lot of Toronto homeowners capitalize on the equity in their Toronto homes to invest in another market vs buying an investment property in Toronto. Bonus: you get to enjoy your investment too.
…eventually retire to a cottage community. Buying now allows a future retiree to lock-in at current prices and earn income when they aren’t using it.
…invest in real estate but can’t afford Toronto. Toronto is expensive and owning here isn’t within reach for everybody. But that doesn’t mean you have to be shut out of real estate completely – plenty of people choose to rent in Toronto and buy a cottage or vacation home elsewhere in Ontario.
How you’ll use your second home or cottage is a big decision and one you want to consider carefully before taking the plunge. How you want to use the home will impact your financing, insurance and of course, where you choose to buy and the kind of property you purchase.
When examining your goals, you’ll also want to consider:
How long you plan to keep the property
Your financial means and expectations of returns
Your future use of the property (e.g., your retirement home, passing it down to your kids, etc.)
Step 2. Get Your Finances In Order
Get Pre-Approved For a Mortgage
How much can you spend on a second home? How much do you want to spend?
Make sure to talk to your banker or mortgage broker before you fall in love with a cottage or vacation property. Qualifying for a mortgage for a second home is different than getting a mortgage on your primary residence. For example, if this is a second home, you’ll likely need a minimum 20% downpayment. Also important to know: if you’re buying a cottage that doesn’t have year-round access, the bank will require you to have a larger downpayment and may have other requirements.
Prices in Ontario’s cottage countries vary significantly and are dependent on the usual things: location, size, finishes, features, condition, and inclusions.
Be Ready For The Costs of a Cottage or Second Home
Of course, it isn’t just about how much you pay for the property! You’ll need to consider a whole slew of other costs that you may never have thought of:
Home insurance – If you aren’t going to be living in the home full-time, expect to pay more for home insurance. You’ll also pay a premium if your home is located far from fire and emergency services. Keep in mind that most absentee home insurance policies still require someone to check on the home every 30 to 60 days. Pro Tip: If you’re going to be renting out your home when you aren’t using it, be honest about that with the insurance company. Yes, it’s more expensive, but if you ever need to make an insurance claim and they found out you lied, your claim will be denied.
Property Taxes – Property taxes vary considerably across Ontario, depending on whether or not city services (e.g. water, sewer) are included. We often forget that Toronto taxes are actually quite low in comparison to other communities because there are so many people that contribute to the taxes. Smaller communities usually have higher taxes.
Water – Depending on where you buy, you may not have access to municipal water so you may be looking at maintaining a well and water treatment equipment. Some homes and cottages don’t have a well OR city services, in which case they usually have cisterns or holding tanks that you will need to arrange to have filled regularly.
Garbage – Garbage and recycling services vary by community. While you might find yourself happily serviced by the municipality (and thus the costs are included in the property taxes), you’ll more likely find yourself paying by the bag or paying to drop off your garbage at the dump.
Maintenance – Property maintenance can be a significant cost if your goal is to buy a second home and not be burdened with twice the work. In addition to the usual house maintenance items (plumbing, roofing, electrical, eavestroughs, furnace and AC maintenance, etc.), remember to plan for grass cutting, gardening and tree maintenance, cleaning (especially if you’re renting it out) and snow plowing (trust me, that 400 metre driveway is way less fun in the winter). Then there are costs to service the septic tank and water well, water treatment, dealing with critters, pool maintenance, and of course, emergency fixes. You’ll likely also want to have someone on call that you trust who can check on your home when you’re not there.
Heating and hydro – You’ll find there are a lot more heating options in cottage country than we have in Toronto. Your furnace may run on natural gas or propane (which means regular propane deliveries and costs), or your cottage may be heated by a fireplace or electric baseboard heaters. You’ll probably also want to invest in a portable generator (power outages in non-urban areas can take a long time to resolve). And don’t forget about the bills from Ontario’s Hydro One – in low-density areas, the average cost is $258.82 vs $205.61 in Toronto.
Internet – Much as we might hate the big internet providers in Toronto, they not only provide WAY faster internet, but they do it for less money too. Prepare to pay more for internet service in your second home or cottage.
Capital Gains Tax – If your cottage isn’t your primary residence, you’ll have to pay capital gains tax when you sell. Talk to your accountant.
There’s no second municipal land transfer tax outside of Toronto, so you’ll only be paying Ontario Land Transfer Tax. Don’t forget to budget for legal costs too.
Step 3. Decide Where to Buy a Second Home/ Cottage in Ontario
Picking which community you want to call your home-away-from-home is one of the biggest decisions you’ll need to make. Should you buy in Muskoka? Prince Edward County? The Kawarthas? Collingwood/Blue Mountain? Niagara? Manitoulin Island? Bruce Peninsula? 1,000 Islands? Northumberland County?
Within each of Ontario’s second home/cottage districts, there are multiple communities to consider too. What’s important to you?
When choosing your second home or cottage community, you’ll want to consider:
Proximity to services, shops, and restaurants vs seclusion and privacy
Proximity to where you expect to spend your time (beaches, trails, etc.)
Distance to major highways. What kind of weekend commute are you prepared to make?
If you’re planning on renting your cottage out, where you buy will significantly impact how much rent you can get for it.
We’ve written detailed guides about some of Ontario’s best resort and cottage communities to help you narrow down your search:
Related: Prince Edward County Guide
Related: Muskoka Community Guide
Related: Kawarthas Community Guide
Related: Niagara Region Community Guide
Step 4. Define Your Needs:
If you live in Toronto, you’ll be surprised at how much home and land you’ll get for your money in Ontario’s cottage areas. Case in point: we own a fully renovated 3,000 sqft+ house with a pool on almost 4 acres of land for the price of a one-bedroom condo in Toronto.
But remember: bigger isn’t always better. The bigger the property, the more expensive it is to furnish and maintain and the longer it takes to clean. And while owning an acreage may seem like a great idea, you might not enjoy the weekly 4-hour mower ride to cut the grass (or the bill to pay someone to do it).
Before you decide how big of a home or cottage you want, give some critical thought to how you expect to use it. Will you be entertaining big groups of people? Or do you want to use it as a romantic getaway?
If you’re planning on renting out your home when you aren’t using it, keep in mind that larger properties will command more rent…but you could also end up with rowdier guests who are more likely to throw a party.
Waterfront vs Waterview vs. Neither
This is one of the biggest decisions that will impact how much money you spend.
In most of Ontario’s cottage communities, waterfront homes come at a premium. And of course, there are the costs of canoes, kayaks, paddleboats and water toys you’ll want to buy.
Other things to consider if you decide to buy a waterfront:
Rules about developing the shoreline
Maintenance costs – waterfront homes may come with more acreage, but that means more maintenance too (bringing the dock in, etc.)
How much are you going to use it? You’re paying a premium to be on the water – will you take advantage of a waterfront lifestyle?
Usually, you won’t have city water or sewer services on waterfront properties
Insurance may be different – especially if you’re renting it out (talk to your insurer for details)
Proximity to amenities – waterfront homes and cottages are usually located further away from amenities and services Waterview homes can also be a more affordable option if you aren’t likely to miss being able to wade into the water from your yard.
Features and Condition of the Home
When you’re buying a vacation home or cottage in Ontario, you need to spend time defining what you want. What are your must-haves? Nice-to-haves? Absolutely what-nots?
How many bedrooms and bathrooms do you need?
What kind of indoor and outdoor living spaces do you need?
Do you want to buy land and build your dream cottage or buy something that’s already built?
Do you want municipal services or are you ok with a septic tank and water well?
Are you searching for an all-season property that you can enjoy 12 months a year or just a seasonal cottage?
Do you want something that’s already renovated or would you prefer to do it yourself?
Old or new? Older homes come with more maintenance time and costs.
What style of second home do you want? Rustic cabin in the woods or a modern granite and steel masterpiece? Old farmhouse?
Do you want multiple buildings on one lot? Bunkies?
Don’t forget to think about the little stuff like dishwashers. Some of the things you take for granted in the city can drastically impact your weekend enjoyment.
Step 5. Go Househunting
Let the fun begin! Whether you’re searching for your second home online, hitting up open houses on the weekend or searching with a REALTOR, hunting for a second home or cottage is an exciting experience.
Work With a Local Real Estate Agent
Buying a rural home is very different than a city home, and it’s important to have an agent who represents your interests. Sure, you could work with the various listing agents, but their job is to get the best price and terms for the Seller. Always get someone to negotiate the best price and terms for you.
Pro Tip: We have connections with the best REALTORS across Ontario’s s vacation and cottage home markets and we’d be happy to connect you. Just send us an email or text.
Search for a Cottage Online
There are two ways of seeing properties available for sale in Ontario’s cottage countries:
Search on www.realtor.ca (where search results may be delayed 1-2 days )
Get custom listings sent to you by a local real estate agent
Remember that in a lot of Ontario’s smaller communities, many properties never make it to the MLS – so work with a top agent who can bring you those secret home opportunities.
If you want to get custom listings sent to you for a particular community, get in touch and we’ll connect you with our favourite local agent.
Be Prepared: It Might Take a While
While all real estate is seasonal, we really see it in Ontario’s cottage communities. Expect to see more listings in spring, summer and fall – the winters can be exceptionally quiet.
Expect to Compromise
Almost everyone needs to compromise on something, and it usually comes down to 4 things: size, finishes, location or price. What’s most important to you? Would you rather live in a bigger house or on the lake? Are you OK spending more money for a renovated house or could you buy a cheaper house and do the renovations yourself? Do you want to be part of an established community, or would you prefer to watch a transitional area grow around you?
House Hunting in Real Life
This is your opportunity to get a feel for the community that just might end up being your second home. While most cottage buyers plan their house hunting in advance and rent an Airbnb, if you’re looking to buy in a hot area or on the lakefront, you might need to be ready to make a spontaneous day trip see the newest listings. Open houses aren’t common in many cottage communities, given the vast distances between properties and the lack of walk-by traffic so your best bet will be visit homes for sale with a local real estate agent.
Buying a cottage or vacation home in Ontario is exciting…but make sure you’ve carefully considered everything before you sign on the dotted line. Send us a note to be put in touch with our vetted local agents here.