smiling family


With summer in the air, families are starting to enjoy their vacation properties. Keeping the cottage in good order is often top of mind early in the season. However, with the rise in multi-generational usage of vacation retreats – especially during the COVID-19 pandemic – these properties are getting more expensive to maintain, renovate, and pay property taxes on. Parents living off their retirement income may own the cottage, but many are facing cash-flow issues as inflation soars; meanwhile, their children are stretched thin taking care of their own finances. Indeed, families are struggling to find the money to do necessary upgrades and preserve the vacation property for future generations to enjoy.

The reverse mortgage solution

Although much of the discussion around vacation properties in a wealth planning context revolves around passing the cottage to the next generation through strategies such as gifting or living wills, one of the big concerns today for elderly parents is that if they pass suddenly, their children – who themselves may be approaching retirement –might need to sell the cottage because they don’t have the cash flow to maintain it.

Your clients in this situation will be interested to hear about an innovative financial tool that allows them to tap into the equity they’ve built in their home as a source of funding for their retirement goals: The CHIP Reverse Mortgage by HomeEquity Bank. 

With a CHIP Reverse Mortgage, Canadian homeowners age 55+ can access up to 55% of the value of their primary residence and turn it into tax-free cash without having to move or sell their home. These funds can then be used to finance any necessary renovations and upgrades to their vacation home or to cover annual property taxes.

Since the money your clients receive from a reverse mortgage is a loan, it’s not added to their taxable incomes and does not affect benefits such as Old Age Security (OAS). Plus, with a reverse mortgage there are no monthly mortgage payments to make, which frees up additional cash for cottage upkeep and maintenance. An added benefit is that your clients don’t have to withdraw funds from their investment portfolios, which can lead to taxable consequences for them and impact your assets under management.

Using a reverse mortgage to support the financial goals of your retired clients is even more of an attractive option today, as the continued rise in Canadian housing prices has buoyed homeowners’ equity and created greater opportunities to leverage that equity to keep the cottage in the family.

Keeping the cottage comfortable and in the family.

One of the many benefits of a CHIP Reverse Mortgage is its flexibility to meet the different planning needs of your retired clients. For instance, a reverse mortgage can also be used to pay for upgrades to a vacation property that allow retirees and their families to use the cottage year-round. Such renovations can include winterizing the home, levelling steep inclines, repairing staircases, upgrading the plumbing, and generally making the property more accessible and age-friendly.

Whether your clients are planning on living in their vacation property year-round, want to add space to accommodate new members of the family, or just want to refresh the cottage, a CHIP Reverse Mortgage can help them finance the necessary upgrades – and ensure their vacation home stays in the family for future generations.

To learn more about the CHIP Reverse Mortgage and how it fits in your clients’ financial plans, visit us online.

Ready to provide your clients with a tax-efficient solution that will help them live their retirement on their terms? Contact a Business Development Manager today.

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