Just over a year ago, I made the huge step of purchasing my first home. (Don’t be so impressed, I was almost 30, it was time).
I’m a millennial so, I obviously browsed the internet for all the do’s and don’ts, tips and tricks of buying a home. With the weighing reminder from all the internet “experts” about “the hidden costs of home-ownership” and “the first year is the toughest”, it is no wonder that spending much of my readily available savings on a down payment conjured feelings of pure panic.
I could surely write you a hefty list of advice for purchasing your first home. Tips like, make sure you can get INTERNET at that cute home tucked into the forest of trees in the middle of nowhere (Yes, that happened). However, I will stick to one important tip that helped to relieve some of the stress that came along with making the largest purchase of my life.
If you are considering buying or building your first home, find out if you qualify for the The Home Buyers’ Plan! If you’re like me, I had heard of the plan (HBP) but really had no idea how it could help me or how to use it.
What is the Home Buyers’ Plan?
The Home Buyers’ plan is an exception to the rules of withdrawing from RRSP’s to use toward the purchase of your home for first time buyers. Under the plan, you are eligible to withdrawal up to $25,000, tax free, from your RRSP. Which means you don’t need to claim the amount of the withdrawal as income for that year and pay the tax as you would in a typical scenario. I look at it as if I simply loaned myself interest-free money from my RRSP.
In my situation, when I had found my little piece of (internet-less) paradise, my mortgage agent provided me with the form to complete and submit to my RRSP provider in order to withdrawal the funds under the plan. But, the form is available on canada.ca and is simple to complete.
Good news, no repayment instalment is due until the second year AFTER the date of the withdrawal. Which helps to take some of the load off in that struggling first year of home ownership. With annual instalments, I have 15 years to repay the borrowed amount back to my RRSP.
So, If you’re in the market for you first home (YAY for you!) have a chat with your RRSP provider and take a look at the requirements and restrictions for the Home Buyers’ Plan. If you have any questions about buying YOUR first home, reach out to us at firstname.lastname@example.org or 519-586-7922.