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Posts tagged ‘RRSP’

28
Apr

Should I Use RRSPs For A Down Payment?

Bulk up your down payment with help from your Registered Retirement Savings Plan.

Loan AppThe Home Buyers’ Plan (HBP) is a program from the Government of Canada that allows first time home buyers to withdraw up to $25,000 from their RRSP towards their Canadian mortgage rate down payment for their first home, tax free.

How Does the Home Buyer’s Plan Work?

You can use your RRSP to help buy a new home, but in order to ensure the withdrawals are tax free, there are a number of conditions and requirements that apply.

  1. You must be a first time home buyer, and a Canadian residentTo participate in the Home Buyers’ Plan (HBP) for your best mortgage rate, you must be a first time home buyer and a resident of Canada at the withdrawal time. You may only be considered as a first time home buyer if you, and / or your spouse haven’t owned and lived in a primary residence for at least four years before the date of the RRSP withdrawal.
  2. You and your partner can both withdraw up to $25,000.
    If you are purchasing the home with a spouse, you can both withdraw $25,000 each from your RRSP accounts under the Home Buyer’s Plan. This means you could potentially have up to a total of $50,000 towards your first home, reducing your mortgage rate amount and payments, along with overall interest requirements.
  3. The deal must close within one year.
    The home must be purchased or built within one year of the withdrawal to apply for the Home Buyer’s Plan.
  4. You have up to fifteen years to repay the amount
    You have up to fifteen years to repay the amount you withdrew starting the second year after you made the withdrawal. Each year, you must pay a minimum of 1/15 of the withdrawn amount. For example, if you withdrew $15,000, then each year you would have to pay back $1,000 to your RRSP. If you skip a payment, then the payment amount will be counted as income and you will need to pay taxes on it.

Restrictions of the Home Buyer’s Plan

Any RRSP contributions made less than 90 days before the withdrawal date cannot be used towards the Home Buyer’s Plan.

22
May

Planning to Retire With a Mortgage? You’re Not Alone

Canadian’s won’t be retiring their mortgage debt anytime soon, according to a recent survey by the Bank of Montreal. Data shows that more than half (51%) of Canadian homeowners plan to carry their mortgage into their retirement. But there’s more to this figure than meets the eye, says Phil Soper, chief executive of Royal LePage Real Estate Services. Soper argues that changing demographics and approaches to money management are what’s causing this increase, rather than just increased consumer debt. Read more »

23
Feb

Should You Pay Off Debt or Invest in Your RRSP?

With the RRSP deadline looming, many Canadians are trying to make sense of their investment options. Personal debt levels in Canada have hit record highs, most of us don’t have a pension to fall back on and our retirement savings are far from adequate. Which leads us to the perennial problem: Should Canadian’s focus on paying off their mortgage and lowering debt or invest in RRSPs?  Read more »

17
Jan

Which is Better? RRSP Loans or Cash Back Mortgages

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 »