If you’re planning to buy your first home anytime soon, you may be able to take advantage of a helpful federal government program. This enables you to withdraw money you’ve already contributed to your registered retirement savings plan (RRSP) and use it towards anything related to your home purchase, including your down payment, closing costs or real estate fees.
But, the key is that the funds must be in your account at least 90 daysbefore you can withdraw them under the Home Buyers’ Plan (HBP).
You can withdraw up to $25,000 ($50,000 per couple) from your RRSPs tax- and interest-free to buy or build a qualifying home for yourself or a related person with a disability.
You can borrow funds to contribute to your RRSP
If you don’t have money set aside for your RRSP, don’t worry, because you can get a loan from your bank in order to make your contributions.
You can contribute up to $26,930 or 18% of your annual salary… AND, you can also top up going back to the first year of your working career. You may have noticed these details on the bottom of your notice of assessment (NOA) each year.
The only exception to the first-time buyer requirement where you can take advantage of the HBP is if you have a disability or you’re helping a related person with a disability buy or build a home. But, you have to be able to prove that the new home is a better fit for the needs of the disabled person than his/her current home.
You’re considered a first-time homebuyer if you didn’t occupy a home that you or your current spouse or common-law partner owned in the past four years.
Paying back your RRSP
The HBP requires you to repay all withdrawals to your RRSP within 15 years. You’ll have to repay one-15th to your RRSP each year until your HBP balance is zero. If you don’t repay the amount due for a year, it must then be included in your income for that year.
Repayments don’t affect your RRSP deduction limit. You can still contribute to your RRSP and designate that amount as a repayment under the HBP, even if your RRSP deduction limit is zero.
I took advantage of the HBP back in 1995, and it was so convenient!
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I would've given six stars if I could but this thing only let's me give 5 stars. Excellent brokerage in town Harry gives you the right advice, you can count on him for all your financing needs.
Exceptional customer service. Very friendly and caring people to work with. They reaiect your time and your hard earned money so you will be getting honest advise that protects you and your wealth.
Working with Harry was an absolute pleasure. Our mortgage approval was a bit of a process, as we were selling our present home and then using it as our down payment. But unfortunately, the market didn’t allow us to do so and Harry helped us through all of it. He went above and beyond to answer any questions we might have. What we appreciated the most was how hard he worked for us and made our purchase happen.
In today’s market not a lot of brokers can work on a deal like ours. We did our homework to find originators of our debts, but it was a daunting task and we were just going in circles until we called Harry at Majestic Mortgage. Harry answered all our questions in a professional and prompt manner and worked on our debts, he was focused 100% on providing us the best solution. Thanks Harry for all the effort and making the process quick and painless. We couldn't be happier with the service we received, and will definitely be returning to Harry.
-A. Baliswadi & K. Mahabir
It was great to have Harry Saund as our mortgage broker as first time buyers. He was very professional and everything went very smoothly with him. I would definitely recommend him to people looking to get a mortgage.