From Home Equity to Holiday Haven: A Guide to Buying a Vacation Home Abroad

If you’ve owned your home for 20, 30, or even 40 years, chances are you’re sitting on significant equity. Whether your mortgage is fully paid off or you’ve simply benefited from Toronto’s rising home values, you’ve got a major asset that can be leveraged for something more exciting than sitting in your bank account: a vacation home abroad.

For many in the baby boomer generation or slightly younger, the idea of escaping harsh winters or creating a peaceful retreat is more than just a dream—it’s a smart lifestyle investment.

In this series, we’ll guide you through how to turn that built-up equity into a beachside villa in Portugal, a mountain escape in Costa Rica, or a golf course retreat in Mexico. First, let’s cover the foundation you need to understand.

Why a Vacation Property Abroad?

Buying a property overseas isn’t just about sipping margaritas on the beach (though, yes, there’s that too). It’s about:

• Diversifying assets internationally

• Creating a part-time or future full-time lifestyle

• Gifting your family a place to gather (or even an inheritance)

• Generating rental income when you’re not using the property

  
  

Step 1: Assess Your Home Equity

Before you start browsing beachfront condos, assess your financial position:

• Get a home equity evaluation from a trusted local real estate professional

• Understand how much liquid capital you can access via:

  
  

  • A Home Equity Line of Credit (HELOC)

  • Refinancing

  • Bridge financing if selling and buying at the same time

  
  

• Consult with a financial advisor to review tax implications and retirement planning

  
  

Step 2: Decide on the Destination

Each destination has unique rules, pros, and drawbacks. Here are a few popular ones:

Each of these will be featured in its own in-depth article in this series.

Step 3: Understand the Legal & Financial Landscape

When buying abroad, you’ll need to understand:

A. Foreign Ownership Laws

• Some countries restrict where foreigners can buy

• Others require local partnerships or longer-term residency

  
  

B. Financing Options

• Many Canadians buy cash using equity

• Mortgages abroad are limited, require high down payments, or involve higher interest rates

• Some countries (like Portugal) allow Canadians to obtain local financing with a Portuguese bank account

  
  

C. Closing Costs & Taxes

• Legal fees, title insurance, notary costs, and taxes can add 5–10% to the purchase price

• Capital gains taxes on resale vary country to country

• Some countries (like Costa Rica) have low property taxes (<0.5%)

  
  

D. Residency & Visa Considerations

• Portugal’s D7 Visa or Golden Visa program

• Mexico’s Temporary or Permanent Resident Visa

• Costa Rica’s Pensionado Program (perfect for retirees)

  
  

Step 4: Work With the Right Professionals

Don’t go it alone. Your team should include:

• A Canadian real estate advisor to help leverage your home equity wisely

• A local agent or buyer’s representative in your destination of choice

• An international real estate lawyer

• A tax advisor who understands cross-border tax law

  
  

If you’re considering short-term rentals, also consult:

• A property manager and

• A local accountant

  
  

Step 5: Test Before You Buy

If possible, rent in the area you’re considering—ideally for a few weeks in different seasons. This gives you time to:

• Experience local life

• Understand neighbourhood pros/cons

• Meet with professionals in person

• Tour properties without pressure

  
  

Next in the Series

We’ll be breaking down each destination—starting with Mexico—to explore:

• Most popular regions (e.g. Puerto Vallarta, Sayulita, Tulum)

• How the buying process works

• Taxes, maintenance, and ownership structures

• Safety, healthcare, and long-term liveability

• Success stories from Canadian homeowners

Final Thoughts: Make This Move With Intention

Whether this becomes a snowbird escape, part-time rental, or full-time future relocation, using your home equity to buy a vacation property can offer lifestyle enrichment, financial flexibility, and a lasting legacy for your family.

It’s not just about the home—it’s about the freedom to design your next chapter.

Want to Explore Your Options?

I work closely with a network of international real estate professionals who specialize in helping Canadians buy abroad. If you’re curious about the process—or just want to explore what’s possible—I’m happy to walk you through it, step by step.

➡️ Let’s book a free consultation to review your equity position and discuss which destinations might best match your goals.

Rylie C.