Have you heard about the Home Buyers’ Plan (HBP)? It might be something that would interest you if you are a first-time home buyer planning to purchase a home.
The Home Buyers’ Plan is a program that will allow Canadian residents and their spouses to each withdraw up to $25,000 from their RRSP - TAX FREE. These funds are then used to build or buy a qualifying home. This can be especially appealing if you are scratching your head wondering where you are going to get the money for your minimum down payment, which can be up to 20%!
Here are a few things to consider:
- You must be a Canadian resident and first-time home buyer at the time of withdrawal.
- Your Registered Retirement Savings Plan contributions must remain in RRSPs for at least 90 days before the withdrawal date in order to be used for the HBP.
- You have until the following October 1st to either purchase or build your home after the RRSP withdrawal.
- You will have to repay 1/15 of the borrowed amount to your RRSPs each year. This will continue until you have a balance of zero for your HPB. Generally it must be repaid within 15 years. If you fail to make one of these payments, it will have to be included in your income for that year.
Is the HBP right for you? Talk to a mortgage broker today to find out more about this option.