Blog Post

Using your RRSP for a downpayment through the HBP.

Anita Groves • February 23, 2021

As the March 1st, 2021 RRSP deadline approaches for the 2020 tax season, if you have money saved for a downpayment but you’re not quite ready to buy a home, here’s a little strategy that might interest you. Did you know that you can use the money saved in an RRSP as a downpayment? It’s called the Home Buyers’ Plan, or HBP for short.

Instead of keeping your downpayment tucked away in a savings account or TFSA, consider using your savings to purchase an RRSP before this year’s RRSP deadline. This will lower your taxable earnings for 2020 and trigger a (bigger) tax refund or lessen the amount of tax you have outstanding. You can then use the money saved towards your goal of homeownership. Admittedly, this won’t play a huge role in building a downpayment, but in times like these, every bit counts!

So here are some of the criteria for using the Home Buyers’ Plan.

You must be considered a first-time homebuyer to use the HBP. This means you have either never bought a home previously, or, in the last four-year period, you did not occupy a home that you or your current spouse or common-law partner owned.

You have 15 years to pay back the RRSP with payments starting in the second year after the withdrawal. While you won’t pay any tax on the money withdrawn from your RRSP for the downpayment, you will have to pay back the total amount you withdrew over 15 years. The CRA will send you an HBP Statement of Account every year, and your repayments will not count as new RRSP contributions as you’ve already received the tax break from those funds.

Funds have to be in your RRSP for at least 90 days to be eligible for use in the HBP. This is a rule not many people are aware of, but it’s pretty important. So if you decide to purchase an RRSP with your savings to be used as part of your downpayment for withdrawal through the HBP, you need to wait at least 90 days before buying a home to make everything work. If you decide to buy a home before the 90 days is up, the RRSP purchase can still be withdrawn, but it will negate the tax savings.

You can access up to $35,000 ($70,00 per couple) from your RRSP account to be used as a downpayment through the HBP. The government increased the accessible amount in 2019.

You can learn more about the Home Buyers' Plan by checking out the CRA website here. Or, if you’d like to discuss how the HBP could work for you and your personal financial situation, contact me anytime!

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Anita Groves

PROFESSIONAL MORTGAGE BROKER

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Fixed or Variable Mortgage? How Canada’s Economic Shifts Could Impact Your Decision

By Anita Groves • February 24, 2025

Navigating Mortgage Rates in an Uncertain Market With Canada’s economy facing trade tensions, inflation concerns, and a potential slowdown, mortgage rates are in flux. Borrowers must weigh the risks and rewards of fixed vs. variable rates to make the best decision for their financial future. What’s Driving Mortgage Rate Changes? Several key factors are shaping the mortgage landscape: Trade Uncertainty – New tariffs between the U.S. and Canada could push inflation higher, impacting bond yields and fixed mortgage rates. Inflation Pressures – If inflation stays above the Bank of Canada’s 2% target, rate cuts may be delayed, keeping borrowing costs higher. Recession Concerns – If economic growth slows, the BoC could cut rates, making variable-rate mortgages more attractive. Fixed vs. Variable: Which One is Right for You? 🔒 Fixed-Rate Mortgages: ✅ Predictable payments for peace of mind ✅ Protection from future rate hikes ❌ Typically higher initial rates ❌ Costly penalties if you break your term early 📊 Variable-Rate Mortgages: ✅ Lower starting rates with potential for savings ✅ Easier to break or refinance if needed ❌ Payments can fluctuate with rate changes ❌ Higher risk if inflation pushes rates upward What’s the Best Move Right Now? ✔ Go Fixed if you want stability and protection from rising rates. ✔ Go Variable if you believe rates will drop and you can handle some risk. ✔ Consider a Hybrid Mortgage to get the best of both worlds. Stay Flexible & Informed Mortgage rates are unpredictable, and the best choice today may change in a few months. Working with a mortgage professional can help you navigate these shifts and secure the best deal for your financial future. Need expert guidance? Reach out today to discuss your options!

How to Ensure a Smooth Home Purchase

By Anita Groves • February 19, 2025

Chances are, buying a home is one of the most important financial decisions you’ll make in your life. And as mortgage financing can be somewhat confusing at the best of times, to alleviate some of the stress and to ensure your home purchase goes as smoothly as possible, here are six very high-level steps you should follow. While it might seem like the best place to start the home buying process is to browse MLS on your phone and then contact a Realtor to go out and look at properties, it’s not. First, you’re going to want to work with a licensed independent mortgage professional. When you work with an independent mortgage professional, instead of working with a single bank, you’ll be working with someone who has your best interest in mind and can present you with mortgage options from several financial institutions. The second step in the home buying process is to put together a mortgage plan. Unless you have enough money in the bank to buy a home with cash, you’re going to need a mortgage. And as mortgage financing can be challenging and not so straightforward, the best time to start planning for a mortgage is right now. Don’t make another move until you discuss your financial situation with an independent mortgage professional. It’s never too early to start planning. As part of your mortgage plan, you’ll want to figure out what you can afford on paper, assess your credit score, run some financial scenarios, calculate mortgage payments, and have a clear picture of exactly how much money is required for a downpayment and closing costs. You’ll also be able to discuss which mortgage product is best for you, considering different mortgage terms, types, amortizations, and features. Now, what you qualify to borrow on paper doesn’t necessarily mean you can actually afford the payments in real life. You need to consider your lifestyle and what you spend your money on. Understanding your cash flow is the key. Make a budget to verify you can actually afford your proposed mortgage payments and that you have enough funds to close on the mortgage. No one wants to be house-poor or left scrambling to come up with funds to close at the last minute. If everything looks good at this point, the next step will be to get a preapproval in place. Now, a pre-approval is more than just typing some numbers into a form or online calculator; you need to complete a mortgage application and submit all the documents requested by your mortgage professional. Only proceed with looking at properties when you’ve been given the green light from your mortgage professional. When you’ve found a property to purchase, you’ll work very closely with your mortgage professional to arrange mortgage financing in a short period of time. This is where being prepared pays off. As you’ve already collected and submitted many documents upfront during the preapproval process, you should be set up for success. However, remain flexible and provide any additional documentation required by the lender to secure mortgage financing. Once you have firm lender approval and you’ve removed conditions on the purchase agreement, don’t change anything about your financial situation until you have the keys. Don’t quit your job, don’t take out a new loan, or don’t make a large withdrawal from your bank account. Put your life into a holding pattern until you take possession of your new home. So there you have it, six steps to ensuring a smooth home purchase: Work with an independent mortgage professional. Put together a mortgage plan. Figure out what you can actually afford. Get a pre-approval. Provide the necessary documentation. Don’t change anything about your financial situation until you take possession. If you’d like to discuss your personal financial situation and find the best mortgage product for you, let’s work together. We can figure out a plan to buy a home as stress-free as possible. Please connect anytime; it would be a pleasure to work with you.