The homebuyers plan can be described as the facility extended by the federal government for the benefit of homebuyers. This plan enables you withdraw funds from your registered retirement savings plan (RRSP), which you can use for building a qualifying home for yourself or a related person with disability.
Let Canadian Government Help You Buy Your Dream Home
Through this facility, you can withdraw up to $25,000 in a given calendar year. The implication is that with the federal government’s homebuyer’s plan, you can make use of about $25,000 ($50,000 in case of working couple) out of your RRSP savings to finance the down payment on your home purchase mortgage.
Eligibility Conditions for RRSP Home Buyers Plan
The essential condition to benefit from RRSP Home Buyers Plans is that your RRSP contribution must remain in the RRSP for not less than 90 days before you can withdraw them under the Home buyer’s plan. You need to provide a signed agreement to the end that you are buying or building a qualifying home.
The general condition to using the RRSP home buyers plan is that you must be able to repay all the withdrawals to your RRSPs within the time frame of 15 years. Further, you will have to repay a particular amount to your RRSPs every year until your RRSP balance is zero. If this is not done for a year, then it will have to be included in your income meant for the said year.
Why Choose RRSP – Advantages of RRSP Plan
One great advantage with respect to RRSP home buyers plans is that the withdrawals you make from RRSPs under this scheme are non-taxable provided you repay it within 15 years. The payback amount is should be not less than one-fifteenth of the total amount you withdrew from your RRSP. Therefore, in order that you do not miss out any repayments, you should set up an automatic monthly, bi-monthly or weekly contribution to your RRSP.
RRSP home buyers plans are a great advantage to homebuyers since you are able to withdraw for your mortgage payments from your existing resource. It might enable you accumulate the 20% down payment required to avoid the obligation to pay default insurance premiums.
For instance, even if you may have enough money to repay your mortgage down payment, it really makes some sense to make use of the RRSP home buyers plans. Consider you have already saved $25,000 for a down payment. Assuming you still have enough room in your RRSP to contribute that amount, you can move your savings into RRSP at least 90 days before your closing date. You can withdraw this amount through the RRSP home buyers plans. By this arrangement your $25,000 RRSP contribution will count for the tax deduction during the given year, which you can use to fund the mortgage home purchase or related expenses.
Let Canada MGC Experts Review Pros and Cons of RRSP Plan for You
However, it is important you thoroughly review the pros and cons associated with this strategy. Decide whether you will be able to repay the set amount every year. Depending on the investments and rate of return that you are likely to get out of your current investment, decide whether it is the right time to take advantage of the RRSP home buyers plans. It really pays you off to forego the future sheltered growth potential of your RRSP in order to reduce the mortgage amount at present.
We offer the most professional and reliable assistance to homebuyers to make use of the RRSP homebuyers plan. Contact us and we can simplify the whole process for you.
Let Canada MGC mortgage experts evaluate your RRSP suitability. For more details call 1-866-963-CMGC (2642) and contact our professionals.