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Secondary Home Mortgages


Secondary Home Mortgages aka Second Home Mortgages

FACT 1: Majority of these mortgages get declined match with what is defined as a secondary home!

FACT 2: And for those who select a right property end up getting their mortgage applications declined.

It’s a great idea however the details tend to be confusing & tends to have lots of in accurate information. This article is an attempt to clarify the specific details about Secondary Homes & Mortgages.

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Mortgages on Secondary Homes




Secondary Home Mortgages in a Nut Shell

The maximum mortgage you can get on your secondary home is area specific. In Metro Toronto Ontario the maximum mortgage approval you can have is $600,000 – $700,000. The max Secondary home mortgages in Cottage country properties requiring winterization or having limited access may only go as high as $350,000 in Ontario Canada. Depending on the location, accessibility & construction type secondary Homes are divided into 2 types. Let’s call them as Type A & Type B for now.

We have access to mortgage providers who allow you to buy your secondary homes with as low as 5-10% down payment.

Unfortunately you cannot buy a secondary home with gifted down payment & standard down payment proof of seeding for 90 days applies. The minimum credit score required is 680 or above for all applicants & you are not allowed to have any 3rd party guarantors to qualify for your Secondary home mortgage.

Documents required:

  1. Fully executed & accepted Sales & Purchase Agreement on an eligible secondary home property
  2. Employment & Income verification
  3. 90 days Proof of down payment

4 Critical points to know:

  1. Both Fix or Variable rate mortgages are available on type A & B type secondary homes
  2. To qualify for less than 5 year term or any variable rate mortgages on your secondary home you have to qualify at today’s qualifying rate of 4.64% with 25 year amortization
  3. Your income should serve all the consumer debts including your primary residence mortgage, taxes & utilities
  4. No Bankruptcy or judgments in past on the credit report

What property qualifies as a Secondary Home?

A second home is a place where you intend to stay regularly in addition to your primary residence. This could be a condo closer to your work place, a house or a cottage where you like to spend your weekends and/or holidays. Property requiring winterization is also eligible as a Secondary home however some conditions apply.

A secondary home could be occupied by a family member i.e. a property closer to your kid’s university or your parents can live in there. You are not collecting rent on that property on regular basis.

Rental properties & rental pool properties, time shares are not considered as Secondary Homes.


What is a Type A – Secondary Home

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Type A secondary homes are the properties located in residential, rural or seasonal zoned areas with year round road access reasonably maintained by local municipality. Private Service roads are fine as long as there is a valid private maintenance contract in place.

The permanent foundation has to be made of concrete or concrete blocks or preserved wood which is certified by a professional engineer installed above & beyond the frost lines.

The property has to have permanent heating source installed. A drinkable water source is required.

The least requirement for a property to qualify as a secondary home is a fully functional kitchen,3 piece bath, a bedroom & common area. Acceptable titles are Condominiums & free hold properties. Interest ownerships, co ops & time shared are not eligible under this program.

Finally the secondary home has to be in an easily marketable area and in good repair & maintenance order. The properties remaining life has to be at least 5 years more than the mortgages amortization period.


What is a Type B – Secondary Home

Essentially all of the above requirements except the property is only accessible by a boat, foundation is a floating foundation, does not have permanent heating system instead has wood stove fire place for heating. Property has access to running water however it’s not drinkable.

To know more on your secondary home mortgages options you are encouraged to click this link to schedule your no cost- no obligation mortgage strategy session in Mississauga Ontario.