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Using RRSP's to Help

Fundamentals for using building blocks from your RSP to buy a home.  The Canadian Homebuyers' Plan allows you to borrow funds from your Registered Retirement Saving Plan (RRSP or RSP for short) to buy your first home. If you qualify, you and your spouse can each borrow up to $20,000 from your Registered Retirement Savings Plans to use as a down payment on a home. Combined, that's a total of $40,000 that may be available to you. You then have 15 years to repay your RRSP.

Here's what you need to know:

• The RSP funds must be on deposit for at least 90 days.
• You require a signed agreement to buy or build a qualifying home - new or resale.
• Of the borrowed RSP funds, 1/15 must be repaid each year beginning two years after the funds were withdrawn.
• Your RSP carrier can provide you with Form T1036 for completion.
• Mortgage Calculators
  calculate your mortgage payments
• You can only participate in the program once.
• Read more about the home buyers plan here.
• For further information and all details about the Home Buyer's RSP Plan, please visit Revenue Canada's Web site under Home Buyers Plan (HBP):

Even if you have already saved for your down payment, it may make good financial sense to access your savings through the Home Buyers' Plan. For example, if you had already saved $20,000 for a down payment - and assuming you still had enough "contribution room" in your RRSP for a contribution of that amount you could move your savings into a registered investment at least 90 days before your closing date. Then, simply withdraw the money through the Home Buyers' Plan.

The advantage? Your $20,000 RRSP contribution will count as a tax deduction this year. Use any tax refund you receive to repay the RRSP or other expenses related to buying your home.

While using your RRSP for a down payment may help you buy a home sooner, it can also mean missing out on some tax-sheltered growth. So be sure to ask your financial planner whether this strategy makes sense for you, given your personal financial situation.

Ontario Home Ownership Savings Plan

Take the first step and use RSP's as your first stop along the way to financial success and freedom in retirement

Go to the Province of Ontario site

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