SMART HOMEBUYERS DOWNPAYMENT PLANS
It’s not quite time yet but you’re beginning to think seriously about buying your first home. Among your early considerations are how much home you will be able to afford and how you are going to finance your purchase. You’ve heard about the Home Buyers Plan (HBP) and the Tax-Free Savings Account (TFSA) and you’re wondering which of these might be the best home-financing option for you. Take a look at both options:
HOME BUYERS PLAN (HBP)
Did you know you can use your RRSP savings for a DOWN PAYMENT on your home?
With the federal government’s Home Buyers’ Plan, you can use up to $25,000 of your RRSP savings ($50,000 for a couple) to help finance your down payment on a home.
To qualify, the RRSP funds you’re using must be on deposit for at least 90 days. You must also provide a signed agreement to buy or build a qualifying home.
The best part is the withdrawal is not taxable as long as you repay it within a 15-year period. The payback amount is at least one-fifteenth a year of the amount you withdrew from your RRSP.
Using your RRSP’s as a downpayment may be a great option as you have the ability to draw from some of your existing resources and it might possibly allow you to put down the 5% required to finance a home or accumulate the 20% down payment needed to avoid having to pay default insurance premiums. Even if you already have enough money for your down payment, it may make sense to access your RRSP savings through the Home Buyers’ Plan.Tax-Free Savings Accounts
TAX FREE SAVINGS ACCOUNT (TFSA)
There are No “first-time home buyer” restrictions and No dollar limits on the amount you can use. There is no requirement to repay your TFSA withdrawal, so you won’t encounter tax issues down the road.
You can use either or both of these options to help you buy your home. Chat with a mortgage professional to find out which options might work best for you. The Fort McMurray Real Estate market has some fantastic bargains for buyers. Now could be the perfect time to buy a home.