Waterfront and mountain properties can make great getaway points and can also be a good investment. Programs are now available which enable Canadians to purchase a vacation home with as little as 5% down and still maintain a very attractive monthly payment.

Depending on the intended use and location, some vacation/second home programs offer loans up to $700,000. Please note that most of these programs are not structured for investment, rental pool or timeshares, so rental income will not be included in the qualification process. In addition, there may be additional restrictions on living units, etc., depending on the program qualifications.

One of the more desirable aspects of these types of programs is that the property restrictions, again, depending on the use, are greatly restricted. This allows the inclusion of cabins, cottages and other vacation properties that may be usable or attractive during certain times of the year. For instance, a cottage that has not been insulated or otherwise made usable during the winter months could still qualify for this program.

Most investment buyers desire to put down as small a down payment as possible, but, if you a carrying a large mortgage and property values fall, you could end up carrying a mortgage that is more than what the property is worth. Also, if you put down less than 20% on a residential property, you may be required to carry mortgage insurance. Generally, a property will still be considered residential if it has four or fewer living units. Properties with more than four living units are normally classified as commercial property and the mortgage qualifications will change.

If you do put down 20% or more, you should be able to get the best interest rates, and your position will be stronger enough to be able to get an open mortgage. Meaning you’d be allowed to pay off the mortgage early without incurring a penalty. Another option for an investment buyer is to determine if the mortgage is portable, that is if you can "move" the mortgage to another home or property with no or diminished penalties.

As with a standard mortgage loan, fixed, variable and capped variable mortgages are available with these programs and the amortization periods are also comparable to a standard mortgage loan. Although the purpose of these homes may be purely recreational, the property should still be considered an investment, and due diligence should be done in terms of researching the probability for resale and of increasing market value.

Properties offering easy accessibility to both winter and summer activities are of particularly worth of exploring as vacation homes, since they are likely to increase in value and will have broad market appeal at resale.