If you are looking to buy your first home, did you know that you can use your RRSP to make a larger down payment? The Home Buyers’ Plan will allow you to withdraw up to a certain amount from your plan without penalty. You will be able to top up your available funds for a down payment on your home and make your mortgage payments more affordable.
What is the Home Buyers’ Plan?
The Homer Buyers’ Plan is a federal government program that allows you to withdraw up to $25,000.00 in a calendar year from your registered retirement savings plan (RRSP) to buy a home. You and your spouse or partner can each withdraw up to $25,000.00, which will give you up to $50,000.00 to use toward the cost of a home.
How the Home Buyers’ Plan Works
If you meet the eligibility conditions, you can withdraw funds from your RRSP to buy a home. The funds must be held in an individual RRSP, not a locked-in or group plan. You can withdraw funds from more than one RRSP as long as you are the registered owner of the Plan.
The contributions must stay in the RRSP for at least 90 days before you can withdraw them under the Home Buyers’ Plan. If you try to withdraw them before the 90-day limit, the contributions may not be deductible.
Repaying Funds to your RRSP
The funds you withdraw from your RRSP must be repaid into your Plan starting in the second year after they were withdrawn from your Plan. You have up to 15 years to replay the amount withdrawn from your RRSP under the Home Buyers’ Plan; however, you can repay the full amount at any time.
The Home Buyers’ Plan can help you increase the amount of your down payment for your first home and make this major purchase more affordable. If you are thinking of getting into the market for the first time, call me for a personal consultation.