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Mortgage 101 – cottages and short-term rentals | June 2021 Part 4

In this episode of Mortgage 101 with Clinton Wilkins and Todd Veinotte, as heard on News 95.7, the guys talk about cottages and short-term rentals, Eastern Shore vs South Shore cottages, and background checks for mortgages in Canada.

Mortgage 101 with Clinton Wilkins & Todd Veinotte – June 2021 – Part 4

Don’t feel like watching the video? Check out the transcript below.


Support Local

Clinton Wilkins: [00:00:00:15] We’re a local business, and I think that’s really important. I think it’s more important now to support local than it has been in the past. We know how challenging it is for small businesses.

You know, I think obviously there’s some optimism in the air. I was really optimistic when I came to work on Wednesday because I knew things were opening up and the weather was really good. It’s summer. And, you know, there’s no better place I’d rather be in the summer than really at a cottage.

Are cottages a pipe dream — even for the wealthy?

Todd Veinotte: [00:00:28:17] Yeah, exactly. Nice segway. So let’s talk about cottages. A recent story in the National Post to discuss the fact that cottage life is becoming a pipe dream for a lot of people. Just can’t afford it. Right? Even for the wealthy or the so-called wealthy, it’s becoming out of reach. What are your thoughts on that?

Clinton Wilkins: [00:00:47:14] I think it’s a luxury item and, you know, to bring it back to Nova Scotia a little bit. Dr. Strang said straight out, you know, it’s the elite that have second homes. And, if you have, you know, a trailer and a seasonal campground, if you have a cottage, if you have a second home, you are the elite.

And we need to worry really about people’s primary housing and the place that you’re going to live, you know, the majority of your time. And, you know, cottages aren’t for everyone. It’s an expense. And it’s sometimes as much or more expense than your primary residence. I’ve owned cottages before, and I can tell you, you know what, I love the cottage, but you know the mentality of the cottage for me changed over time.

South Shore vs Eastern Shore Cottages

You know, when I first bought it, you know, it was the excitement of buying something, doing the renovations. Enjoying it on the weekends, things like this, and where I bought my cottage, I owned a cottage on the Eastern Shore of Nova Scotia in a small community called Salmon River Bridge. For those of you who are familiar with the Eastern Shore, it’s near the Head of Jeddore.

And, you know, I really loved it down there, but it was far. I found. You know, it was an hour away and the challenge with the Eastern Shore, some of the best beaches in Nova Scotia on the Eastern Shore, you know, in my opinion, but there’s not the amenities.

Todd Veinotte: [00:02:15:02] In Kentville and some of those places around there, Right? We’re talking Bay of Fundy, right?

Clinton Wilkins: [00:02:19:14] No, I’m talking about,

Todd Veinotte: [00:02:21:02] Oh, the Eastern Shore.

Clinton Wilkins: [00:02:21:20] Eastern Shore. So, you know, there’s Martinique Beach and Clam Harbour and, you know, there’s some good stuff down there. But to get a really good, proper grocery store, you basically need to go into Porters Lake. And that’s where the South Shore wins. And that’s where the South Shore really wins for me.

I think the weather’s better on the South Shore. And, you know, the beaches, I think are probably equally as good. And some people probably think they’re better. But there is a lot more amenities and quality of life on the South Shore and a lot better than on the Eastern Shore.

Type A and Type B cottages

Todd Veinotte: [00:02:54:25] What goes into mortgage lending when it comes to cottages? What are some of the, so somebody comes to you and they say, look, we want to, a couple or single person, whatever it might be, potential client.

Do you sometimes quickly realize the cottages are going to be you’re not going to pull it off financially? First of all, what are some of the some of the red flags from clients?

Clinton Wilkins: [00:03:14:12] Well, I think the first question I always ask is what type of property is it really? Is it a Type A property or a Type B? So a Type A is a home. A Type B is something that’s lacking, something that would make it a home.

So a Type B property could be a cottage that’s on posts, beams, it could be a cottage that uses the lake water. Maybe there’s a holding tank, maybe there’s not year-round access, maybe there’s not a central heating system. And if there’s a property that lacks any of those things or many of those things, it’s considered a Type B property. It cannot be considered as your primary residence. So you have to have another residence, or you need to have another rental. And that cost goes into play.

And on a Type B property, they also require a bigger down payment. So if you want high ratio insurance, you can only get that high ratio insurance from Sagen and Canada Guarantee. The Canadian Mortgage and Housing Corporation is not in the business of insuring cottage purchases. They are only in business financing or insuring financing for primary residences.

So you need a minimum down payment on a Type B property of 10 per cent down. So right off the get go, you need a little bit more skin in the game than the normal five per cent for a regular owner-occupied property. But if it’s really, truly a second home, you can get away with as little as five per cent. But you need to be able to swing all your expenses from your primary residence.

So that’s the mortgage. That’s property taxes, that’s heat. And you need to swing all the expenses for the new property. That’s heat, regardless if you’re going to heat it or not, we still have to put a cost in for monthly heat. Property taxes, and we still need to qualify that new mortgage on the stress test.

“If I ever hear the word Airbnb, I’m like cease and desist.”

Todd Veinotte: [00:05:06:10] What about potentially using it as an Airbnb rental property part of the year?

Clinton Wilkins: [00:05:10:17] Seasonal or short term rentals are an absolute deal killer for mortgage financing. If I ever hear the word Airbnb, I’m like cease and desist. Honestly, I’m hearing our producers, like, laughing in the background.

Todd Veinotte: [00:05:25:28] Why?

Clinton Wilkins: [00:05:27:01] Because the lenders don’t want to get involved in the liability.

Todd Veinotte: [00:05:30:18] Yeah.

Clinton Wilkins: [00:05:31:06] They don’t want to get involved in the commercial aspect. Licensing from the province, potential taxation issues, short term rentals. No go.

Todd Veinotte: [00:05:40:14] Really? So somebody needs, if you own your property, or if you’re going to do that, you need cash.

Clinton Wilkins: [00:05:44:22] Already need to own the property. And even income from Airbnb they don’t want us to use. They will only really consider rental income if it is a long term.

Can you do short-term rentals if you already own your cottage?

Todd Veinotte: [00:05:54:15] Okay, so let’s say that you have your cottage already and you’ve got it mortgaged and you want to make it an Airbnb. Do you need to disclose it to your lender?

Clinton Wilkins: [00:06:01:23] You don’t need to disclose it because guess what? People situation change all the time. But if you then Airbnb it and want to potentially refinance it down the road, that could be a problem.

Todd Veinotte: [00:06:12:15] Does that happen?

Clinton Wilkins: [00:06:13:16] It does, because guess what? The lenders like use this fancy thing on the interwebs called Google and they look up the address and guess what? They lock up the borrower, too. They have access to more information than we have access to.

Todd Veinotte: [00:06:28:03] So they’ll find out.

Background checks for mortgages in Canada

Clinton Wilkins: [00:06:28:18] Some of the things that they find out. I’m just like you little super sleuths. How did you find out that information? And they have systems that are connected to these underwriting platforms that do things like fraud checks and background checks and risk checks and terrorism checks and all these things. And they click a button and it returns a report.

And based on the report, they say the likeliness of these potential risks to the lender. And it’s not just financial risk that the lenders really thinking about. It’s reputational risk. Right. You know, this is why, you know, if you are a delegate, if you are a government person from another country, it may be a challenge for you to get a mortgage here.

Todd Veinotte: [00:07:16:20] Good thing I’m not.

Clinton Wilkins: [00:07:17:17] I know. Luckily, we’re just regular people and we’re like regular people on News 95.7.

“I love doing this stuff, but I’m still a mortgage broker and I still see clients”

Todd Veinotte: [00:07:22:01] That’s right. How do people get a hold of you, Clinton?

Clinton Wilkins: [00:07:23:25] Check us out online at We’d love to help. You know, thanks for all our loyal listeners. Were on season three of our show and we’re going to continue this all year long. And, you know, I thank you, Todd, for coming out and, you know, being available on the weekend and doing seven days here on News 95.7. And I think it’s great and it’s lots of great content.

Todd Veinotte: [00:07:44:08] Absolutely. So again, that’s the best way, because you get a team, it’s not at you.

Clinton Wilkins: [00:07:50:00] Yeah. We have a whole team of people and you know, I still see clients every day and I get asked if I’m taking new clients. We’re always taking new clients. And, you know, we answer the phone, you know, Monday to Friday and we’d love to help.

Todd Veinotte: [00:08:02:00] Some people want the special Clinton treatment.

Clinton Wilkins: [00:08:04:12] They do. And I help, I see a lot of clients full time. So don’t get me wrong, I love doing this stuff. But I’m still a mortgage broker and I still see clients. And, you know, we’d love to help.

Todd Veinotte: [00:08:15:05] Clinton. It’s always a distinct pleasure to have these chats. It’s been a great hour. Thank you so much, by the way. Appreciate it.

Clinton Wilkins: [00:08:21:21] And happy weekend. Enjoy the weather. And thanks for tuning in, guys.

Todd Veinotte: [00:08:25:25] That’s right. It’s Mortgage 101 Your Guide to Homeownership with Clinton Wilkins and myself, Todd Veinotte, right here on News 95.7. Thanks for listening.

If you have any questions, get in touch with us at Clinton Wilkins Mortgage Team! You can call us at (902) 482-2770 or contact us here.