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Cottage owners who put in a new dock or build a new boathouse should keep records of what is spent as capital improvements can be factored in when the property is sold.

Ryan Tacay/istockphoto

Whether you call it a cottage, a cabin or a camp, when the temperature begins to rise, the dreams of sitting on the dock at a place of your own start this time of year.

But if you don't have the cash on hand to buy one outright, you'll have to borrow the money.

And while the basic process of applying for and qualifying for a mortgage are the same, lenders will look at many more variables when assessing a property before lending money to buy a cottage.

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Barry Gollom, vice-president of mortgages and lending at Canadian Imperial Bank of Commerce, says while your strength as a borrower is important, banks will also take a close look at the property being acquired when determining how much they are willing to lend.

"Lenders will look at the location, proximity to a major market, sometimes is it on a big lake, is it on a small lake, access to the property, year-around is best, paved roads is a plus," Gollom said.

"Lenders will want to ensure that there's a safe and consistent water source as this can sometimes materially impact the marketability and value of the cottage."

Mortgage broker Frank Napolitano says most lenders want a cottage to be a four-season property if they are going to loan you money, but he says some will finance three-season cabins.

"It is difficult to get financing if you can only access the cottage by water," says Napolitano, managing partner at Mortgage Brokers Ottawa.

"The property has to be marketable."

If you aren't putting down at least 20 per cent, you'll need mortgage default insurance just like an ordinary home purchase.

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However, CMHC changed its rules last year so that it would no longer insure mortgages on second homes. That means you'll have to go with a private mortgage insurance company which can provide the necessary coverage if your lender requires it due to the size of your down payment.

Insurers may also have limits on the amount they will cover for a vacation property, depending on its characteristics.

Depending on your situation, you could also consider refinancing your home or using a home equity line of credit if you have paid off enough of it to use it to borrow the cash you need.

Gollom says it is not uncommon for buyers to use a combination of financing through their home and the vacation property to make the purchase.

However, if you only made a small down payment on your home when you bought it and haven't owned it for very long, you may not have the room you need to finance your new purchase.

Joe Walsh, a mortgage broker with Bedrock Financial Group in Toronto, says no matter how you choose to finance your purchase, for the lender it is about whether you can repay the debt.

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"You need to have a lot of room in your income to be able to service the additional, what $200,000, $300,000?" he said.

Gollom said it's important to make sure the decision to buy a cottage fits within your overall financial plan.

"It is a decision that really does require very thoughtful planning," he said. "It is so important to understand the broader implications of the purchase of a vacation property as it relates to your other goals."

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