What is the Home Buyers’ Plan?
The Home Buyers’ Plan (HBP) is a program that allows you to withdraw up to $25,000 (per individual) from your registered retirement savings plans (RRSPs) to buy or build a qualifying home for yourself or for a related person with a disability.
With an RRSP Loan, you can borrow up to $25,000 to contribute to your RRSP for $275/month over 10 years. Once the contribution have been in your RRSP for at least 90 days you can withdrawal the $25,000 under the Home Buyers Plan and use these towards your down payment.
These RRSP loan repayments, in addition to your income and credit history, are taken into account when determining how much of a mortgage you will qualify for and is much more efficient (due to lower payment) than using a line of credit or other loan.
Even if you or your spouse or common-law partner has previously owned a home, you may still be considered a first-time home buyer, it is also possible that only one of you is a first-time home buyer. You are considered a first-time home buyer if, in the four year period, you did not occupy a home that you or your current spouse or common-law partner owned.
Do you meet the RRSP withdrawal conditions?
Let me know if you have any questions about how an RRSP loan (and tax refund) can be used to get you into your own home sooner.
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