Fractional Ownership

Fractional ownership of recreational properties is, as the name suggests, a way for you to become the part owner of a cottage at the fraction of the price of purchasing the whole thing.

These setups – somewhat akin to a timeshare – first appeared in Ontario’s cottage country about a decade ago. Just don’t make reference to timeshares with the brokers selling them: they’re sensitive about being associated with some of the shadier developments in sunny Florida.

Today, there are dozens of options throughout Ontario, and across the country from the Maritimes to Vancouver Island. The styles of fractional properties range from relatively rustic digs reminiscent of a backcountry fishing lodge to luxurious accommodations in some of the country’s most desirable destinations, including Ontario’s Muskoka region and Whistler, B.C.
Regardless of location, the setup is more-or-less the same. For a one-time purchase price, you get to use the same, fully furnished cabin or resort room, a set number of weeks per year, in perpetuity. Since you actually own your share, like any cottage, you’re able to sell it for market value whenever you wish.

But, unlike a typical cottage filled with family mementos, you have to cart away or store your personal belongings at the end of your visit to make way for the next set of owners.

The properties are usually divided into 10 shares, giving each owner five weeks’ use per year. (The two remaining weeks on the calendar are typically used for general spring and fall cleaning of the whole property.) Each owner gets one week in the prime summer months, with the remaining four scattered thoroughly the rest of the year.

Ownership shares range in price from less than $35,000 (about a tenth of what you’d pay for a starter cottage in much of Ontario) to several hundred thousand dollars for the more luxurious properties. The purchase could be financed with a loan or a small mortgage.

If one summer week isn’t enough, you can buy multiple shares. And if you don’t want to use all five weeks at the lake, most resorts allow you to rent your extra weeks out, and many belong to timeshare exchange programs like RCI or Interval International that enable owners to swap weeks at their cottage for time at thousands of timeshare resorts around the world.

While you’re not personally responsible for groundskeeping and other annual maintenance that occupies many a weekend at the lake, there are condo-like fees that cover the cost of that upkeep.

All that said, another – far more popular – alternative for those who want to cottage without the expense and commitment of owning one, is to rent. The beauty of the rental market is that you can try out different regions each year – from the wide sandy beaches of Lake Huron, the big water boating on Georgian Bay, the hustle-and-bustle of Muskoka, then a small, quiet lake in the Kawarthas or Haliburton. Once you’ve found the region that suits you best, many renters book the same place year after year, getting that sense of familiarity, at a greatly reduced cost.

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2 thoughts on “Fractional Ownership

  1. Scott,
    Most mortgage professionals do have access to a lender that will write a mortgage for fractional ownership; they likely will require you to obtain special documentation (i.e. independent legal advice from a lawyer) in order to approve and fund the mortgage. If there is an existing (fractional) mortgage on the property, you would need to find a lender that is comfortable being in second position behind the first priority mortgage already registered. Your best bet is to approach the same lender as the first mortgage. Reason being, most lenders will not fund a 2nd mortgage behind another financial institution’s first mortgage; if it came down to it and your property had to be sold off, bank #1 gets paid first. I would speak to a mortgage broker/agent to help you, they have access to multiple lenders and should be able to help you find what you are looking for!

    If you’d like to get in contact with a mortgage broker who can give you more personal direction, you can visit: https://www.ratesupermarket.ca/online_mortgage_application/

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