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Ben Sage, Moving Woodstock

First-Time-Buyers – How to Borrow your downpayment, start your retirement planning, and buy a house at the same time….

Posted on October 31, 2012 by Ben Sage in First Time Buyer

With the recent changes made to Canadian Mortgage Laws, including limiting Amortization to 25 years, and requiring minimum 5% down payments be made on Mortgages, First time buyers are finding it very difficult to get into the housing market. I have created an innovative plan to assist First Time Buyers in not only buying their first home, but also starting a retirement plan, saving on their income taxes, and if necessary, borrowing some, or all of their down payment!

Do you HAVE an established RRSP?

It’s nearly RRSP season, where banks begin pushing you to invest before the 2012 Income tax deadline, which is March 1, 2013. Contributing to an RRSP throughout the year reduces your income tax burden, and builds savings for retirement. But did you know that you may cash in up to $25,000 of your RRSP to go towards a first home purchase?

If you’re thinking of buying your first home in 2013, my suggestion would be to start socking money away into that RRSP, for multiple benefits:

  • Tax Savings in 2012
  • Saving for your Down payment
  • Building a retirement plan

Don’t have an existing RRSP, or is your RRSP too small to make the minimum down payment on a new home? If you’re comfortable with this, and your debt service ratios support it, you could borrow to invest in your RRSP.  I would consult with your lender of choice about the restrictions, implications and benefits of this option, and using an RRSP for your downpayment in general.

Note – the amount withdrawn for your first home purchase must be repaid over a maximum of 15 years.  Therefore if you were to withdraw $10,000 from your RRSP’s for a first home purchase, it must be repaid at a minimum of $55.55/month for 15 years.

For more information on this program, contact me today.  Additionally, you can read about it here:

http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/rrsp-reer/hbp-rap/menu-eng.html

 


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