Do sky-high home prices and new mortgage rules have you kissing your homeownership dreams goodbye?
Before you throw in the towel, let me introduce you to a resource you probably haven’t thought to tap into: The Home Buyer’s Plan (HBP).
One of the hardest parts of purchasing a home is coming up with a substantial down payment.
By using the HBP to borrow funds from an RRSP tax-free, new buyers can bolster their down payment and avoid a crazy amount of mortgage insurance fees (applicable to any buyers who use a down payment of less than 20%) down the road.
How Much $$ Can I Withdraw?
The new 2019 Federal Budget permits first-time buyers to borrow up to $35,000 from their RRSPs (up from $25,000, the limit set a decade ago) to buy or build their first home.
If you are buying a home jointly with your spouse or common-law partner, you can both withdrawn up to $35,000 each for a total of $70,000 towards your home purchase.
TIP: Ensure your money is in your RRSP account for a minimum of 90 days before making an HBP withdrawal or you’ll be hit with taxes!
How Do I Qualify?
You can qualify for the HBP as long as you can show that neither you nor your spouse has owned a home that you occupied as your main residence in the past five years. Starting in 2020, this program is eligible for those who split from their spouse or common-law partner, even if they are not first-time buyers.
TIP: The funds must be repaid within 15 years, or the withdrawal will have tax implications!
What If I Already Have a Down Payment?
Even if you already have money saved for a down payment, you can still take advantage of the HBP. If you have contribution room, you can deposit your savings into your RRSP, get the tax deduction and use the tax refund you receive to repay the RRSP or cover other house expenses.
Are you a first-time buyer hoping to step into the real estate market this spring?
Call me today at 416 903 7653 or email firstname.lastname@example.org. I would be happy to help you with your real estate needs!