Buying a cottage

A perfect storm

Quebec cottages have never attracted as much interest as they have over the past year. The powerful appeal of second homes has caused offers to skyrocket by 15-30% in some corners of the province. This market frenzy means that buyers have to be very careful.

For many, a lakeside cottage in the Laurentians, less than 90 minutes from the metropolitan area, is simply out of reach… We’re talking about prices as high as a million dollars. North of Mont-Tremblant or in the Eastern Townships, Gaspésie and Charlevoix, it will be two to five years before selling prices become a little more “normal” again.

The median-priced cottage

It’s still possible to find a beautiful country home for $300,000, more than two hours from the metropolitan area. In this case, the chalet won’t be on the edge of a body of water or on the side of a mountain with a breathtaking view.

The rules for financing a cottage are much the same as for a house. A minimum downpayment of 20% of the purchase price is generally required.

The bill to pay before the transaction

In total, the fees and costs associated with the purchase can reach a minimum of $7,000, not including the downpayment. Building inspection, septic tank inspection and water testing can add up to more than $1,000.

The appraisal of the home’s value is often carried out by the bank, at its own expense. If this is not covered by the financial institution, you can expect to pay around $350. Notary fees have risen sharply over the past year: the bill for this professional service is around $1750.

Then, once the purchase is complete, the municipality will impose a transfer tax (“welcome tax”). For a $300,000 cottage, at a rate of 10%, this comes to $3,000. In addition to this amount, you’ll need to budget for moving costs and the purchase of furniture and decorative items. Not to mention the cost of any renovations or work on the home.

Annual and additional costs

As you’d expect, the price of a cottage goes far beyond the monthly mortgage payment. The annual costs of an average-sized second home often exceed $7,000.

The septic tank must be emptied every two to four years, depending on municipal requirements. The bill for this service is usually $250. The average life expectancy of a septic system is 20 years. Changing this system costs between $15,000 and $30,000.

You’ll have to pay around $1,200 a year to insure the cottage, and budget more than $1,500 in property and school taxes. Snow removal costs around $500 per season. Satellite Internet access in an isolated region costs close to $1,500 a year. Electricity and heating bills are about the same as for a main residence.

It’s a good idea to set aside some money each year for maintenance and major repairs, such as roofing. For a $300,000 cottage, that’s more than $6,000 you’d need to set aside annually to cover the unexpected.

© Getty Images

Good advice

• Above all, it’s important to put emotions aside and avoid “impulse” purchases. You need to take the time to target your needs, explore the market, choose the right location and analyze your financing options.
• For a logical, efficient and reasonable buying experience, it’s a good idea to call on an experienced real estate broker who knows the area where the desired cottage is located. This expert can provide you with all the information you need.
• Good news: brokerage fees are not charged to the buyer.

Source: www.coupdepouce.com