Have you made your RRSP contribution yet? This year’s deadline is February 29th, so don’t wait too long. Contributing to a Registered Retirement Savings Plan (RRSP) can have a major impact on your financial situation, saving you hundreds on your annual tax statement. And that’s just the beginning! Budget-savvy individuals will also enjoy the long-term growth of their investment.
Unfortunately, finding the money to invest in an RRSP isn’t always easy. According to a recent report from the Investor’s Group, it’s estimated that nearly 58% of Canadian’s won’t invest in their RRSP this year because there simply isn’t enough money left after paying for basic living expenses.
If you’re struggling to make ends meet, now’s the time to consider a cash back mortgage or an RRSP loan. Both will help you free up extra capital to cover expenses, but in very different ways. Here’s what you need to know in order to make a well-educated decision. Read more
Purchasing your first home can be tough, especially when it comes to scrounging up a sizable down payment. In Canada, you must be able to cough up a 20% down payment in order to avoid purchasing costly mortgage insurance. If you’re struggling to find enough cash to meet this requirement, don’t throw in the towel quite yet. Under the Home Buyers’ Plan (HBP), first time home buyers in Canada can borrow up to $25,000 tax free from their registered retirement savings plan (RRSP) in order to help with their down payment and lower their monthly mortgage requirements. Read more
First-time Home Buyer Help: Mortgage Pre-approvals and Down Payment Options
Purchasing your first home can be a stressful experience. From listings to viewings, paperwork to inspections, there are a lot of things that first-time home buyers need to think about prior to making an offer on a potential home. Luckily, the mortgage brokers at FamilyLending.ca are here to help make your first time-home buying experience as easy as possible. This includes providing you with expert financial advice and assistance on the FamilyLending.ca blog. Today on the blog, we’ll help you understand the importance of mortgage pre-approval, as well as discuss the different types of down payment options available to first-time home buyers.
The Many Benefits of Mortgage Pre-approval
Securing a mortgage pre-approval is an important first step before purchasing your new home. Taking the time to obtain a pre-approval will demonstrate to sellers and realtors that you are a serious buyer, and could potentially help you during purchase negotiations.
A mortgage pre-approval will also help you set a realistic budget for your house hunt. This is because a mortgage pre-approval will tell you exactly how much money you can spend on your new home and what your mortgage payments will be. A mortgage pre-approval also allows you to lock in your interest rate for up to 120 days. With interest rates on the rise, it’s only logical that first-time home buyers should complete the mortgage pre-approval process as soon as possible.
Get A Mortgage Pre-Approval Now
Securing a mortgage pre-approval is easier than you think. The mortgage brokers at FamilyLending.ca can help get you pre-approved today – simply fill out our online mortgage pre-approval questionnaire to get the ball rolling.
Deciding on a Down Payment
There are many different down payment offers available to first-time home buyers. The following are three popular down payment options:
- A Conventional Mortgage A conventional mortgage requires a down payment of at least 20% and involves either a fixed or variable interest rate. Conventional mortgages are the most affordable option since they don’t have to be insured against default.
- Low Down Payment Insured Mortgage Don’t have a large down payment, but still want to buy a house? Then consider applying for a low down payment insured mortgage. Many lenders now offered this type of financing for both new and resale homes. These mortgages have a much lower down payment requirement than conventional mortgages – some are as low as 5%! The one big drawback to low down payment mortgages is that they must be insured to cover potential default of payment. These insurance premiums can be quite high, resulting in a higher carrying cost than that of a conventional mortgage.
- Cash Back Mortgage
There are options where you may receive a Cash Back option to your mortgage. This type of mortgage allows the buyer to have as little as the closing costs and 1% down payment. They tend to carry a little higher interest rate (about 1 % higher than best rates). There are other options than using cash back mortgages and best to consult with your mortgage broker.
- Using Your RRSP as a Down Payment The federal government’s Home Buyer’s Plan allows first-time home buyers to use up to $25,000 per person in RRSP savings for a down payment on a home. This means that a couple can pull a total of $50,000 from their RRSP to help fund their first home. This withdrawal is not taxable, provided you repay it within a 15-year period. To qualify, the funds you plan to use must have been in your RRSP for at least 90 days.
Talk to our Agents at Family Lending Financial for any of your RRSP questions or needs today!
Mortgage pre-approvals and down payment decisions are just a few of the factors you’ll have to consider when purchasing your first home. For more first-time home buyer help, consult with a FamilyLending.ca mortgage broker.
At FamilyLending.ca we do more than help with your financing, we make the whole home hunting process easier.
Chantielle Kennedy writer for Familylending.ca