Should you buy your retirement home before retirement?

Many Canadians dream of retirement, no work and more freedom. Picking the right place for retirement is an important decision and in an ideal situation, it’s a decision that you’ll need to consider long before stopping work. When it comes to retirement homes, you may be asking yourself many questions such as “Are retirement flats a good investment?” or “Where to find a great selection of retirement properties to buy?”. In this article, we’ll cover a few of these scenarios to help you make the right decision when it comes to buying your retirement home.

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Key Highlights

  • Buying a retirement home is an important and exciting decision and you’ll need to consider the pros and cons of buying before retirement.
  • Sometimes delaying buying your retirement home and focusing on investing in an RRSP is more strategic.
  • Buying early and renting out your future retirement home has many benefits.

Should you buy a house before or after retirement?

There are many answers to this question and each answer depends on your current situation. Do you already own a home? How many years away from retirement are you? Have you saved money for a down payment for a mortgage? Do you have a clear idea of where you want to live in retirement? Will you want to downsize? Do you want to get closer or farther away from the city? Do you currently live in the country, region or city that you want to retire in?

You may already know that if you find your retirement home in your active years, it will be easier to get approved for a mortgage and you’ll have the possibility to rent the property until your retirement age. On the other hand, you also realize that buying a home close to retirement will be easier as you’ll have a better idea of what you really need in terms of the size of the property, location, and whether it has a downstairs bedroom or a low-maintenance garden. Also buying a house over 60 means that if you sell your current home and downsize to buy your retirement home, it will free up money that you’ll be able to use during your retirement.

Buying your retirement condo early to generate income now

You may be considering buying a home in your 40s and that’s certainly a very strategic decision as it will allow you to put the property on the rental market, either as a long or short term rental and generate an income now. Actually, the income generated by renting out this property will even bring you closer to your retirement goal. With house prices on the rise, this is a very sound investment. However, make sure to keep this in mind when you buy your retirement property as properties with good rental potential may not be ideal retirement homes and retirement condos may not have the most rental appeal.

Benefits of buying your home early

Whether you buy your retirement home early or not, there are many pros and cons of both decisions.
Here are some of the benefits of starting the process of buying your retirement home early:

  • Your debt-to-income ratio will be lower meaning that financial institutions will be more inclined to accept your mortgage request. This is the primary reason to buy before retirement because retirees are considered risky borrowers by lending organizations.
  • If you buy your home in your 20s, your equity will be higher by the time you reach your 30s and 40s and will be able to go up the property ladder and even sell the home and buy a new property. In this case, you’ll need to refinance your mortgage.
  • Another benefit of buying early is that you’ll get the opportunity to use the property as a vacation home for a few years and therefore will be familiar with the property, the location, the neighbourhood and won’t have bad surprises when moving in after you retire.
  • If the property needs some work done, you can spread the cost of renovation over a few years.

Renting out your property now and retiring in it later 

As we saw earlier, buying a property with great rental potential and using it later as your retirement home can be a lucrative and sound investment. You’ll need to keep in mind all the additional costs such as taxes, utilities and insurance on top of your mortgage reimbursements to make sure you’re financially able to take on a new mortgage. Remember that rental income is taxable.

Traveling abroad and returning for retirement

If you’re currently living abroad, you may consider buying a retirement home now with the idea of returning to the country to live in that property. It’s important to start the process early as many expats may find it harder to secure a local mortgage at a later stage in their life. 

To decide if buying your retirement home before retirement is a good option for you, talk to your IG Consultant. They can advise you on whether this would fit in with your overall financial plan and can also connect you with an IG Mortgage Advisor, who can advise you on the best mortgage option for your circumstances.

If you don’t have one, you can find an IG Consultant here, and you can also contact an IG Mortgage Advisor here.


Published by IG Wealth Management as a general source of information only. Not intended as a solicitation to buy or sell specific investments, or to provide tax, legal or investment advice. Seek advice on your specific circumstances from an IG Wealth Management Consultant.

Mortgages are offered by Investors Group Trust Co. Ltd., a federally regulated trust company, and brokered by nesto Inc. Licences: Mortgage Brokerage Ontario #13044, Saskatchewan #316917, New Brunswick #180045101, Nova Scotia #202507230; Mortgage Brokerage Firm Quebec #605058; British Columbia, Alberta, Manitoba, Newfoundland/Labrador, PEI, Yukon, Nunavut, Northwest Territories.

Mortgage advisors are licensed professionals and equivalent to the following titles per province: Sub Mortgage Broker/Mortgage Broker in British Columbia, Mortgage Associate/Mortgage Broker in Alberta, Associate/Mortgage Broker in Saskatchewan, Salesperson/Authorized Official in Manitoba, Mortgage Agent/Mortgage Broker in Ontario, Mortgage Broker in Quebec, Mortgage Associate/Mortgage Broker in New Brunswick, Associate Mortgage Broker/Mortgage Broker in Nova Scotia, or Mortgage Broker in Newfoundland & Labrador. 

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