Mortgage Teacher Answers: How to use RRSPs for a downpayment
Using your Registered Retirement Savings Plan (RRSP) towards a down payment is really quite simple.
The Home Buyers’ Plan (HBP) is a government program that allows a first-time home buyer to withdraw upto $25,000 from their RRSP to buy or build a qualified home, and provides the home buyer 15 years to repay the funds back into the RRSP.
The first step to apply for the HBP is to verify you meet the qualifications, which are available here.
If this is not the first time you have purchased a home, make sure to read more about what qualifies a “first-time home buyer” here, as it may be in your favour.
Once you have determined you qualify for the HBP, you can take the following steps to apply:
- Fill out Area 1 of form “T1036”
- Bring the form to your RRSP issuer to complete Area 2
- Withdraw the funds for your down payment from your RRSP and deposit into the account you are using to show the available funds with your Mortgage Teacher
- Completing the RRSP withdrawal is fairly straightforward. Once it is completed you will receive a T4RSP statement from your RRSP issuer. Make sure to file this form, as you will need to file it with your income tax and benefit return.
To learn more about the best mortgage plan for you, contact a Mortgage Teacher today.
