Use your RRP’s savings as your home down payment if you are a first time home buyer, is a very smart move.
Your RRSP’s savings can help you purchase your home
Canadian tax regulations allow self-directed RRSP funds to be used for a non-arms length mortgage investment, provided that the mortgage is insured.
As a first time home buyer, you are allowed to withdraw up to $25,000 from your RRSP Tax-Free. This amount can be doubled with your partner to a total of $50,000 to purchase or build a qualifying home. You have to intend to occupy the qualifying home as your principal place of residence
Consider yourself smart if you use your RRSP savings towards the down payment of your new home
To be able to qualify for the RRSP home buyer’s plan the funds that can be used towards the down payment from your RRSP account must be in your RRSP account for at least 90 days before you can withdraw them
Not all RRSP’s allow you to withdraw funds, for example, group RRSP’s or locked in RRSP’s do not qualify
In the RRSP home buyer’s plan when you withdraw funds from your qualifying RRSP account, your RRSP issuer will not withhold tax on this amounts, however, they need to know that your funds will be used towards your down payment using the form (T-1036-10), for notes about completing the home click here
Participants of the RRSP Home buyers plan must begin repayment to their RRSP within two years of withdrawing the funds and take no longer than 15 years
When you as a first time home buyer contribute to a 20% down payment borrowing from your RRSP’s, you may also be eligible for the lowest mortgage rates, add this advantage to your mortgage loan and you are getting a better deal. The RRSP home buyers mortgage plan is also portable
Maximize your RRSP contributions:
- Contribute to your RRSP account the maximum possible stated on your notice of assessment
- You will get your RRSP tax return
- Once on your account your funds will start earning and increasing your worth
- You can borrow from your RRSP account to make your down payment deposit once your funds have been in your account for at least 3 months
- You will need to repay within 15 years the amount you borrowed from your RRSP account for your down payment
- With us, you will have access to the lowest mortgage rates available
- You got your home enjoy life and start earning the equity that your property has to offer
Having further questions or needing assistance with your mortgage?
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