I enjoy working with people who are buying their first home! The process of buying your first home is always very exciting and intimidating at the same time. First time home buyers have a lot of questions. They are looking for advice and guidance that they can trust. I appreciate the privilege I am given me to help them with their mortgage financing. I always make sure that they are well looked after.
But what does the term “A First Home Homebuyer” actually mean in the “mortgage world”?
Most people think that it means that you can buy your first property with the down payment of only 5%. In fact you can buy your second home with only 5% down as long as you are buying it for yourself and your family to move in.
The term “First Time Homebuyer” in the mortgage world means that that you are eligible to participate in the Home Buyer Plan and withdraw your RRSP savings tax-free to use towards your down payment.
To sum this program up:
– You are a first time homebuyer if you have never owned a home before or if you owned a home prior but sold it and didn’t own a property in the last 4 yr period. The countdown of the 4 yr period stars on January 1st.
– If you are a first time homebuyer you can withdraw up to $25,000 tax-free. Typically, you cannot withdraw funds from locked-in RRSP or a group RRSP, so check with your financial institution or employer first.
– You can only withdraw the balance that has been in the RRSP account for the last 3 months. In other words, if you had $15K in the RRSP account 3 month ago and now have $18K because you kept contributing over the past 3 months, you can only withdraw $15K tax free.
– You are buying a property for yourself or a disabled relative to occupy.
– You will have 15 years to replenish your RRSP account
How to withdraw RRSP?
You will need to make an appointment with the financial institution that holds your RRSP savings. They will provide you with a special form to fill out to withdraw your RRSP funds. The form has to be accompanied by a copy of the Real Estate purchase contract that will serve as proof that you are buying a property.
It typically takes 2-4 days to have the RRSP funds transferred to an account that you assign.
If you have any questions, please send me a quick email at email@example.com and I will be happy to help.