Many people question if the Canadian Home Income Plan’s (CHIP) reverse mortgage is available to be applied to a second home or vacation home. Unfortunately, in order to qualify for a CHIP reverse mortgage, your home must be your principal residence. That being said, CHIP’s reverse mortgage can still be used to help you purchase a second home.
With CHIP, you can withdraw the equity you have built up in your principal Canadian residence and use it to purchase a vacation property or second home. If you have enough equity, you won’t even need a mortgage on your additional property! This is especially useful if you’d like to keep the cash flow you have now and avoid creating extra mortgage payments.
With the CHIP reverse mortgage applied to your principal residence, and the acquisition of your second home, you have the option of making interest only payments on your CHIP mortgage or no payments at all. If they have the resources, some seniors choose to make interest only payments for the first few years of their CHIP mortgage to lower their cost of borrowing.
All that being said, you must still qualify for a CHIP reverse mortgage in order to use it to purchase a second home. Otherwise, if you are still considering purchasing a second home or vacation home, other financing options can be explored.