Cabin Mortgages for Medicine Hat Clients
Medicine Hat Cabin Mortgage
Medicine Hat is the size of some of Calgary suburbs. It is relaxed but offers many suburban and semi-urban neighborhoods. Some want something even more remote. For them, a cabin mortgage may be just what they need.
Funding your Medicine Hat cabin will be a challenge if you don’t have the cash to buy it outright. This is because most Medicine Hat mortgage companies won’t extend a loan to let you buy a cabin, especially if it won’t be a primary residence. Most mortgage lenders in Medicine Hat only want to have their loans backed by suburban Medicine Hat homes or condominiums. These are easier to sell if they go into foreclosure.
How do Medicine Hat cabin mortgages differ from conventional mortgages? If you won’t be living in it full time, then the minimum down payment is ten percent. For comparison, the minimum down payment on a single family primary home is five percent. The amount of money lenders will offer also depends on the value of the property. Different formulas are used to determine this. For example, the accessibility of the property is a factor they consider. If you can only reach the cabin in the summer, it has a fraction of the value of a property you can access year-round. If it doesn’t have a source of potable water or year-round heat, the value goes down dramatically. In fact, lenders often require you to prove that there is a well if not a connection to the municipal water supply. The loan may be preconditioned on water tests that say the water is safe.
Does the property have a full bathroom? Think toilet, shower and sink. Does it have a full kitchen? If the answer to either question is no, the odds they fund the loan go down dramatically. That’s because relatively few people want to rely on camping stoves and camping showers. And the lender is concerned about their ability to resell the property if you miss your mortgage payments. Note that lacking a full, formal bathroom and kitchen will also preclude most lenders from classifying it as a permanent residence. Then your minimum down payment is twenty percent. If it lacks year-round heat or is winter-only access, your minimum down payment will be more than thirty percent.
If there isn’t a foundation, it is worth a lot less. If you have to have a caretaker to keep the building habitable, they devalue it. This is because the property is at greater risk of being damaged if the groundskeeper takes a vacation or otherwise can’t do their job.
The value of the property also depends on the amenities. Lakefront properties are worth more. Properties close to resorts are worth more. This may offset the impact of requiring a caretaker of the property. And the proximity to a resort community could allow you to ensure that there is a caretaker on site.
Know that there are a few minimum requirements to be able to put just ten percent down on a cabin mortgage. These are:
- At least a three piece bathroom, full kitchen, bedroom and common area
- Must have a heat source, though it doesn’t have to be permanent – think stove, fireplace or blower furnace
- Must have indoor plumbing and running water on site but could be from a well or water tank
- A foundation is required, but it could be a floating foundation
- Cabin must be at least 750 square feet
- No more than five acres
- Good credit required (generally 680+ credit score)
If you meet all of these requirements, lenders may allow a 10% down payment, even if the property has only seasonal access. That’s especially true if it is in a popular area.
Talk to a Medicine Hat mortgage broker like Whalen Mortgages Medicine Hat to learn about the mortgages available to you before you go shopping for a cabin. We may be able to help you qualify for a lower down payment or lower interest rate. We can also help you secure a land loan on which you could build the cabin you want or get a construction loan to build on property you already own.
Call your Trusted Medicine Hat Mortgage Broker at Whalen Mortgages Medicine Hat today! We work hard to get our clients approved! 587-430-1555.