What most DON’T know about the First Time Home Buyer Program
Vancouver Mortgage Broker Mark Fidgett debunks the First Time Home Buyer Program
When I bought my first home, I was fortunate enough to have some cash saved for a down payment. Most young people, however, don’t have this luxury but they have some money in an RRSP. In this particular situation, using the RRSP First Time Home Buyers Plan (HBP) can be of great benefit.
What is the HBP?
The RRSP Home Buyers plan is a program that allows first time home buyers to withdraw up to $25,000 from their RRSP towards their first home TAX FREE.
How does it work?
As mentioned above, if you are a first time home buyer, you can withdraw up to $25,000 out of your RRSP tax free! If you are purchasing the home with a spouse, you can both withdraw $25k EACH from your accounts. In terms of repayment, you have up to 15 years to pay back your RRSP starting the second year after the year of withdrawal. At this time 1/15 of your borrowed amount must be paid back / year.
What’s the catch?
In terms of penalties, if you don’t repay 1/15 of the borrowed amount / year, you’ll have to add the amount as income.
You MUST be a first time home buyer and a resident of Canada at the time of withdrawal.
You MUST purchase/build the home before Oct 1 after the year of withdrawal.
RRSP contributions of up to 90 days before the withdrawal date can be used towards the HBP.
Why would I do this?
This is one of the only ways to withdraw from your RRSP tax free and a great way to get yourself into the real estate market. Some may argue that you’re missing out on growth in your RRSP while the money is borrowed. However, I think that if you get a good price for your first home, the appreciation of the home will hopefully make up for this.
In this video I’ve included the inside secrets to your credit?
The 3 most important ways to increase your Beacon score.
Your credit score comprises of five factors and I’ve listed these below in order of importance, just as the lender will see it:
Payment History: 35% Impact.
Paying debt on time and in full has a positive impact however late payments, judgments and charge-offs have a negative impact. Missing a high payment has a more severe impact that missing a low payment.
Outstanding Credit Balances: 30% Impact.
The ratio marking the difference between your outstanding balance and your available credit is important here. IN A PERFECT WORLD, you should keep your balance below 30 percent of your available credit limit.
Credit History: 15% Impact.
This marks the length of time since a particular credit line was established. A seasoned borrower is stronger in this area.
Type of Credit: 10% Impact. A mix of auto loans, credit cards, ad mortgages is more positive than a concentration of debt from credit cards only.
Inquiries: 10% Impact.
This quantifies the number of inquiries that have been made on your credit history within a six month period. Each hard inquiry lowers your credit score.
@OwenGreaves That same obsolete agent is a salesman instead of a consultant R/T r Real Esta Agents Becoming Obsolete? - http://bit.ly/cdboti5 hours ago
Got out of the movie theater around 8:30 and it's already dark. Times a changing. Here's to an Indian Summer : ) 5 hours ago
