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Looking for a down payment on a home? Check your RRSPs

If you’re a first-time homebuyer, with the federal Home Buyer’s Plan you may be eligible to withdraw up to $25,000 from your registered retirement savings plan (RRSP) for a down payment when buying or building a qualifying home.

The HBP gives first-time homebuyers access to their RRSP holdings with no tax consequences provided they pay them back within 15 years, freeing up funds for a down payment. Homebuyers who make contributions to their RRSP by March 1, 2010 can withdraw the funds under the HBP after a period of 90 days.

In addition, the tax refund from contributing to an RRSP can be used towards a down payment, or a lump-sum mortgage payment. No RRSPs? An Invis mortgage professional can show you how to establish an RRSP with borrowed funds, and use the resultant tax refund for a down payment.

Here is a basic overview of some of the HBP rules:

You must be considered a first time homebuyer, i.e. you cannot have owned an owner occupied home in the previous five years.
You must be a Canadian resident.
The property purchased must be for a principal residence.
The RRSP must be repaid within 15 years, with minimum annual payments of 1/15th of the withdrawn amount.
Funds must have remained in your RRSPs for a minimum of 90 days before they can be withdrawn under the Home Buyers Plan.

Be sure to talk to me your mortgage professional about how to make the Home Buyer’s Plan work for you.