Around 20 years ago, the Federal govt introduced the RRSP Home Buyer’s Plan. The goal was to stimulate a depressed housing market in the early ’90s. The plan is really quite simple. First time homebuyers could borrow up to $20,000 from their RRSP to be used towards the purchase of a home. Buy with a spouse or your common-law spouse and you’ve doubled the amount to $40,000.
There really is no catch. You simply have to pay it back to your RRSP plan over a 15 year period. The minimum payment is 1/15th of the amount that you withdrew payable each year. That’s it.
Today, the plan still exists with a slightly higher limit and more flexibility. You can now withdraw up to $25,000 per person… still capped at 2 people max per purchase (married or common-law spouse). You can also participate in the Home Buyer’s plan if you haven’t owned a home in the last 5 years. This can work to your advantage if you previously owned but sold. click here for the full guidelines and qualifications. Read the rest of this entry »