Dominion Mortgage Brokers Help First Time Home Owners Use Rrsps For A Down Payment
As a first-time homebuyer, the biggest hurdle standing between you and your dream home in Alberta is a down payment. The Canadian government has recognized this obstacle and has introduced the Home Buyers Plan.
Under this plan, a qualified first-time homebuyer can withdraw up to $25,000 from a registered retirement savings plan (RRSP). Couples can access up to $50,000 ($25,000 each). However, is it the right solution for you? Your Dominion Mortgage Brokers can be your guide.
Do You Qualify To Use RRSP as A Down Payment? – Dominion Mortgage Brokers
- You must be a Canadian resident
- You have to be a first-time homebuyer
- The home is to be your principal residence
- You must provide a written agreement to build or buy a qualifying home
- The RRSP funds you borrow must have been on your account for not less than 90 days before withdrawal.
- The withdrawal from your RRSP must be within 30 days of taking title to the home
What Are The Advantages Of Using Your RRSP As Your Down Payment?
- You are using your own RRSPs tax-free to stop paying rent. For example, if you bought a $400,000 house, you could pull $20,000 out of your RRSP tax-free for the down-payment.
- As long as you repay the withdrawal within 15 years, it is not taxable.
- You are required to pay back a minimum of 1/15 per year starting the next tax year. On $20,000, the payment required back into your RRSP each year would be $1333.
- You can still contribute as much as you’d like to your RRSP in addition to your Home Buyer payback amount.
What Are The Disadvantages Of Using RRSP As A Down Payment?
- Lost opportunity cost to compound investments over the repayment period.
Considerations before Using Your RRSP as A Down Payment
The repayment process requires you to designate your RRSP contribution as a repayment to the Home Buyer Plan.
In summary, the Home Buyer Plan offers you (first-time homebuyer) the chance to use money you have already saved inside your RRSP towards a down-payment for your first home. With guidance and assistance from a reliable and knowledgeable Dominion Mortgage Broker, you will finally be able to own your home in the most tax-efficient way possible. Contact one of our industry-leading Dominion Mortgage Brokers to get started.Request Mortgage Info