How to use your RRSPs as a Down Payment

The Federal Government has a Home Buyer’s Plan that lets First-Time Home Buyers withdraw money from their RRSPs to use towards a down payment for a home - without being penalized.  However, there are some restrictions:

·         You must be a First-Time Home Buyer.  According to the fine-print of this plan, a First-Time Home Buyer is anyone who has not owned a home that has been used as a principal residence within the last 5 years. (Note: the defini tion of a First-Time HomeBuyer differs when talking about Property Transfer Tax, which I will explain later)

·         The maximum withdrawal is $25,000 per person (max. $50,000 per couple)

·         You must live in the home (ie. It must be your principal residence)

·         You must repay the money withdrawn from your RRSPs within 15 years

·         The money that you take out of your RRSPs must have been invested into your RRSPs for more than 90 days before withdrawal

Withdrawing your RRSPs is a great way to access cash that you’ve already saved up.  Just make sure you pay the money back within 15 years.