Want to Buy a Cottage? Here’s What to Keep in Mind

When you’re admiring a marshmallow roasted to gooey perfection in front of a crackling campfire or sitting on a dock in the thralls of yet another fiery orange sunset, it’s easy to wonder why you shouldn’t buy a cottage of your own, so you can fill up your memory with more of the joyous moments that come from living the cottage life. 

What is a Cottage?  

Before you think about how to buy a cottage, it’s helpful to know what a cottage is and how it differs from other types of homes. In Canada, a cottage is generally a small, rural house found in scenic areas like lakes, forests, or rivers. These properties are often used as vacation homes where people can relax and enjoy the outdoors. Cottages in Canada range from simple, rustic cabins to more luxurious homes, depending on what kind of experience you’re after. Some cottages offer a basic, off-grid experience, while others come with all the conveniences of modern living.  

 What is a 3-Season Cottage?

If you’re looking into cottages in Canada, you’re probably wondering, what is a 3-season cottage? A 3-season cottage is designed for use during spring, summer, and fall but isn’t well-equipped for winter because it might lack proper insulation and heating. It may be a more affordable option, but if you want to use it in the winter, you’ll likely need to invest in some upgrades. 

Cottage Rentals as an Option

Cottage rentals offer a great way to try out the lifestyle first. Renting allows you to check out different cottages. You can explore various locations, styles, and amenities, helping you decide if cottage ownership is right for you. You have the chance to enjoy the cottage experience without the long-term responsibility. Through renting, you’ll learn important things like how much upkeep is involved, what kind of access and utilities you’ll need, and whether you prefer a secluded spot or one closer to town. Cottage rentals can be a helpful step in your decision-making process. 

New vs. Resale Cottage

You might be wondering about a new cottage and what can it offer. While cottages are often associated with rustic countryside homes, a new cottage blends that charm with updated features. It usually offers modern features like better insulation, energy-efficient systems, and fewer immediate repairs. It might even include smart home technology and updated heating or cooling systems, making it easier and more cost-effective to maintain. If you’re looking for a low-maintenance, move-in-ready property, a new cottage could be a great fit. Older cottages, however, bring their own unique charm and character. They’re often found in more established areas and might come with larger plots of land. Older cottages can also be more expensive to insure due to their age, outdated materials, and higher risk factors like older wiring or less efficient heating systems. In some cases, insurers may require costly upgrades to approve coverage, such as replacing an old roof or installing modern fire safety systems. 

Financing and Permits

Financing a cottage is often different from buying your main home, especially if you’re looking at a three-season cottage. Lenders may have fewer mortgage options for seasonal properties, or they might ask for a higher down payment since these cottages are seen as riskier. You might also get a higher interest rate due to the seasonal nature of the home. Talk to your lender and make sure the financing works for the specific property you’re interested in. For fully winterized cottages, the terms might be more flexible.  

Keep local permits in mind if you’re planning to renovate or expand your cottage. Adding insulation or upgrading the heating system to make your cottage winter-friendly will likely need permits. In rural areas, zoning laws can be more strict, especially if you’re near protected lands or water, so you’ll want to check the rules before starting any big projects. Even adding a dock or shed might need approval. This is particularly true for cottages in Canada, where regulations vary depending on the area you’re in. 

Things to Keep in Mind Before You Buy a Cottage in Canada 

If, like many prospective buyers in our Cottage Trends Report, you’re looking for a quality of life that can’t be found in large urban centres, before you get ready to pack your favourite canoe paddle and head out into the hinterland, here are seven things to keep in mind before you buy a cottage in Canada: 

Location

Whether you’re considering selling your home in the suburbs in favour of a rural place to relax year-round or evaluating a cottage property solely for investment purposes – location – as in whether your prospective cottage has direct waterfront access, even more so than the many amenities you can add to your property – will likely be a significant factor in your decision. 

While not a must for year-round dwellers, waterfront properties are favoured by summer renters looking to unwind with wild swimming, fishing or boating activities. 

But precisely because of their potential to pull in higher revenues and more frequent stays from short-term renters, waterfront properties typically have a higher resale value than their landlocked cousins, making it more expensive to buy a cottage of this type. 

Meanwhile, cabins surrounded by lush green forests with water within a few miles will often check all the boxes for buyers looking for long-term living quarters in the great outdoors – provided their cabin in the woods has plenty of our next item up for consideration, i.e. access. 

Accessibility

It won’t matter how amazing your cottage is if getting to it is difficult or expensive. This is especially relevant if you plan to buy a cottage on an island that requires a boat trip before landing. Still, it also applies to cottages located just beyond the distance that you or your renters are willing to travel for vacations. 

For city dwellers wanting to put down permanent rural roots, regularly plowed roads providing safe, all-winter access to cottages are a must. However, because rural municipalities may not supply them, you may have to pay out of pocket for the snow removal services you require. 

Utilities 

The heating, plumbing, electrical and telecom services that are standard fare in a bustling metropolis may not exist the further you venture outside city limits. Before you buy a cottage, you’ll need to weigh your need for services against what the area supports or what your budget can supply. 

For example, suppose the cottage you’re currently considering lacks electricity but has a good amount of land or roof space with southern exposure. In that case, you may be able to install solar panels and a battery solution that powers lights and essential appliances and pays for itself in five to ten years. But if the property currently has no running water and no way to access municipal services, costs to drill a bore well could be prohibitive. 

Maintenance + HOA Fees

You may not want to buy a cottage if you bought a condo instead of a stand-alone home because of your fear of maintenance. 

No matter what a seller might tell you, even if a cottage is new, recently renovated or outfitted with all the latest bells and whistles, maintenance remains most of the cottage’s middle name. From docks that need pulling in and pipes that need draining in seasonal dwellings to wood that needs stacking and roofs that need repairing in long-term abodes, either you’ll need to do the work yourself, or you’ll have to find and pay someone else to do it for you. 

If you buy a cottage with the intent of renting it for extra income, you’ll likely require one or more house-cleaning professionals to tidy up and change linens after each rental stay, and you may also need a house manager or handy person who can respond at a moment’s notice to furnace or refrigerator malfunctions and more. 

Lastly, if your cottage resides within a community where utilities, barbecue facilities, playgrounds, water recreation equipment or other amenities are shared by multiple cottages or cabins, homeowner association (HOA) fees will need to be researched and accounted for in your budget. 

Insurance

If you buy a cottage to serve as your primary residence, its insurance needs will be similar to your home in the city. 

If it’s a secondary property, you might be able to bundle it with your current homeowner’s policy for savings and get similar dwelling, property, personal belongings and liability protections. 

Seasonal properties can be insured under comprehensive packages that protect buildings and their contents against all threats or basic “Named Perils” packages that cover common claims such as fire, explosion, smoke or water damage. 

Watercraft such as motorboats, jet skis and sailboats may be able to be rolled into various packages or may need their own policies, depending on what sort of coverage your insurer has to offer. 

Due Diligence Requirements

Just as you would before purchasing a residential or commercial property, before you buy a cottage, it’s important to do your due diligence. 

Due diligence for a cottage includes ensuring the property meets all local permitting and zoning requirements, finding out if there are easements or other burdens that you need to be aware of – and if you intend to buy a cottage with waterfront access – gaining a thorough understanding of your riparian (water) rights.  

You’ll also want a professional with experience in evaluating cottage properties to thoroughly inspect all buildings and structures, as well as heat, hydro, water and septic systems (if they exist). 

Tax Implications

If you plan to buy a cottage to generate passive income, any revenues you receive must be declared on your taxes. If the revenues result in your total income being pushed into the next tax bracket, in addition to a higher tax bill, the extra income could also disqualify you from benefits such as the GST/HST credit or the Canada Child Benefit. 

If you’re a senior, the effects could be even worse, making you ineligible for the annual Age Amount Credit or causing an OAS Clawback. 

If you’re not renting, but your cottage or cabin still isn’t your principal residence, you’ll likely be subject to capital gains taxes when you sell the property. 

Finally, if you expect to inherit a cottage, check out our blog to find information designed to help you keep it. 

Ready to Buy a Cottage? 

Before you sign on the dotted line, it’s important to accurately assess the total annual operating costs for your cottage venture, or your little slice of paradise could quickly become a sinkhole for your hard-earned savings. 

So, break out the spreadsheet software, start building your bunkie budget and have your real estate agent and an accountant or lawyer familiar with cottage transactions review your document to ensure you’ve unearthed all the relevant costs. 

Once you get the go-ahead from the professionals, make your offer and prepare for bliss-filled slow-living adventures only cottage dwellers can claim.