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RBC Financial Planning - Tips on Budgeting and Borrowing

Buying a New Home


Financial help for first time home buyers

If you're a first time home buyer you can take advantage of government assistance to make it easier to purchase your home.

For one thing, under the Home Buyers' Plan, you can borrow up to $20,000 out of your RRSP ($40,000 for a couple). You must repay the money within 15 years.

Today, about 50% of first-time home buyers use their RRSP savings to help finance a down payment.

Even if you have already saved for your down payment, it may make good financial sense to take advantage of the Home Buyers' Plan. For example:

  • if you have contribution room in your RRSP and
  • if you could make that contribution at least 90 days before your closing date.

You could then borrow that money from your RRSP under the Home Buyers' Plan and still have the tax deduction.

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. It may be better to borrow the required funds with a 2 nd mortgage and leave the funds in your RSP.

You'll have to crunch some numbers to decide.

You can also take advantage of the CMHC first time buyers program. This allows you to put down as little as 5% down payment. The main disadvantage is that you will also be required to pay a 2.5% insurance fee to protect the lender.

This has covered only a few issues involved in buying a home. There are many more. If you'd like to get more information, click here to find the RBC financial planning professional closest to you.

Important information about our financial planning services can be found at the bottom of our homepage.

Things you should know about buying a home
Financial help for first time home buyers
Consider renovating instead of moving


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 İRoyal Bank of Canada 1995-2017 Last modified: 05/12/2005 08:20:57