Competition = Low Mortgage Rates

Can I use Funds from my RRSPs as a Down Payment without Tax Penalty?

The answer is yes. Through the Home Buyers' Plan (HBP), Revenue Canada permits you to use up to $25,000 of your RRSP funds as a source of down payment towards buying or building a new qualifying home. Revenue Canada will not view your eligible withdrawal amount as income therefore, that amount will not be taxed. However, there is a catch. The amount withdrawn from your RRSP must be repaid into your RRSP within a 15 year period. If you fail to make the repayment by the specified deadline, the amount that was withdrawn will then be counted as income for that year and you will be taxed.

If you use your RRSPs within the specified guidelines of the Home Buyers' Plan, you will see both immediate and long term benefits. For example, you are immediately able to increase your down payment amount which in turn decreases your principal amount owing. By owing less on the principal, you will gain substantial savings on interest alone over your mortgage term.

Don't Forget About Home Insurance

There are so many details and steps in the process when buying a new home, but do not forget about protecting your investment once the deal is done. When you go to meet with your insurance broker, take the following information with you to ensure that you get the proper insurance for your new home:

• Property appraisal
• House plans and other property details
• Past insurance history
• Personal information (such as identification, age, occupation, etc.)

Interest Rate Guarantees

Many lending institutions will guarantee you an interest rate as soon as they receive your application. The guarantee means that if mortgage rates go up, you will get the old, lower rate. If you are buying a house, or switching your mortgage (also called transferring), the guarantee can last from 60 to 120 days (2 to 4 months).

Tips on Saving for a Down Payment

If saving for a down payment seems impossible, think again. The following tips will help you achieve this realistic goal:

• Set a goal by determining what you can afford to spend on a home
• Calculate how much you need to save (generally 5% of the purchase price, although more is better)
• Remember to include closing costs and other expenses related to the purchase into how much you need to save
• Be realistic and pace your savings according to your desired purchase date (e.g. If you want to purchase your home within a year, take the calculated down payment amount, add the amount for closing costs and other expenses, then divide by the number of months until the purchase date).

Why do it Alone?

Investing in a new home is a big decision, so as a first-time home buyer, why do it alone?

Let our professionals guide you through the home buying process. We can advise you on all the legalities, the home inspection and the property appraisal. We will also work to find you the best interest rate and mortgage option that suits your financial situation.

Buying your first home can be overwhelming because of the wide variety of property available. It is important to get pre-approved for a mortgage because this will help you narrow your property search.

Our professionals will help get you pre-approved and be able to tell you exactly what you can afford, what your interest rate will be, and the amount of your monthly repayment.