Have an RRSP but don't have a down payment for your Home??

Are you ready to buy but are lacking a down payment? Have you been a renter for at least 5 years? Do you recall hearing something about the First Time Home Buyer’s Plan (HBP) through the Government of Canada? Rings a bell but can’t remember the details?

The HBP is a program that allows individuals who have not owned a home in the last 5 years to withdraw up to $25,000 from their RRSPs to buy or build a qualifying home. The home can be for you or for a related person with a disability. Why is this plan a benefit? Because you do not have to claim this withdrawal as income!! You have 15 years to pay back the withdrawal in minimum 1/15 increments or greater per year until the balance is zero with no income tax implications. 
Brad Adams a Mortgage Broker specialist will get you the best and lowest mortgage rates for real estate and refinance in kelowna and all of B.C.
But what if you don't have RRSPs to withdraw? You may be able to apply for an RRSP loan for $25,000 today. And as long as the funds remain in the RRSP for 90 days or longer, they can be withdrawn under the HBP plan. $25,000 as 5% of a purchase price is $500,000. So we are creating enough of a down payment for up to $500,000 purchase price. Add a spouse for another $25,000 and there is enough down payment for a $1,000,000 property. This should cover 99% of first time buyers. Essentially….you are borrowing your down payment! 
There are more benefits too! The $25,000 contribution still counts as an RRSP contribution for the year which means assuming there is enough room in your contribution limit, and you have paid the appropriate amount of income taxes for the year, this will equate to a hefty tax return that could either be applied to the RRSP loan, pay for any legal fees related to the house purchase, or consolidate high payment and high interest debt.


As a Mortgage Broker in Kelowna I can help meet your real estate needs.

There are some conditions that apply of course. Some RRSPs, such as locked-in or group RRSPs, do not allow you to withdraw funds from them so you must let your financial planner know what plans you have with the RRSP so they are invested into the correct RRSP product. The RRSP loan may change the debt service ratio of the mortgage application so when considering this option, ensure you are speaking with a qualified mortgage professional prior to applying for an RRSP loan as we can work out the entire scenario ahead of time to gauge what effect this will have on debt service ratios. I have access to accountants and financial planners that can put this program in place so if would like to see if this works for you, please call me for a full evaluation of your situation and suitability for this program.