If you are looking to purchase a home and you and/or your spouse are First Time Home Buyer, you may be eligible to use your Registered Retirement Savings Plan (RRSP) for your down payment with the Home Buyers’ Plan (HBP).  The government’s Home Buyers’ Plan allows you to withdraw money from your RRSP of up to $25,000 per person or $50,000 per couple, in order to purchase your home.  You will first need to qualify and here are conditions to determine your eligibility from the CRA website:

  • you must be considered a first-time home buyer;
  • you must enter into a written agreement to buy or build a qualifying home for yourself, for a related person with a disability, or to help a related person with a disability buy or build a qualifying home. Obtaining a pre-approved mortgage does not satisfy this condition;
  • you must intend to occupy the qualifying home as your principal place of residence no later than one year after buying or building it. If you buy or build a qualifying home for a related person with a disability, or help a related person with a disability buy or build a qualifying home, you must intend that that person occupy the qualifying home as his or her principal place of residence; and
  • in all cases, your repayable HBP balance on January 1 of the year of the withdrawal must be zero.

 

The exception to the First Time Home buyers ‘ condition is:

  • you are a person with a disability and you withdraw funds under the HBP to acquire a home that is more accessible, or better suited to your needs;
  • you withdraw funds under the HBP to acquire a home for a person with a disability related to you by blood, marriage, common-law partnership or adoption, and the home is more accessible or better suited to the needs of that person; or
  • you withdraw funds under the HBP and give those funds to a person with a disability related to you by blood, marriage, common-law partnership or adoption, to acquire a home that is more accessible or better suited to the needs of that person.

The Home Buyers Plan could be a great option if you and/or your spouse have contributed to RRSP’s and will allow you to tap into this resource for the down payment for your mortgage. The RRSP withdrawal would be repaid over fifteen years, so you would repay one-fifteenth a year minimum to your RRSP and income tax will not be deducted from the amount withdrawn, and the withdrawal amount will not be included in your income as long as the funds are repaid into the RRSP in the future. You can choose to begin your repayments earlier, but your repayment period will remain the same. Repayments made before you are required to start your repayments will reduce the actual HBP balance and will reduce the repayment amounts over the entire repayment period.

As a First Time Home buyer, you could also be eligible for the Home Buyers Tax Credit (HBTC).   The HBTC assists first-time home buyers with the costs associated with the home purchase, such as legal fees, disbursements and land transfer taxes, which are a particular burden for first-time home buyers, who must also save for a down payment. The $5,000 non-refundable HBTC amount applies to qualifying homes acquired after January 27, 2009, and provides up to $750 in federal tax relief.

The Oakville Mortgage Team are expects at finding the best options and mortgage rates for First Time Home Buyers.  Our is has some of the most dynamic and experienced personnel from the mortgage industry. We will provide all the necessary advice and guidance that you might require for your mortgage application, interest rate negotiation, or any other related procedure. We constantly work towards offering you the best solution in the most cost-effective manner.  Contact us today.