How to save for a down payment to buy a home?
Before you can purchase the home of your dreams, you need to save for a down payment. Here are a few tips to help you achieve your goal.
Whether or not you're a first-time buyer, we have a savings solution that will help you save for a down payment.
Before moving forward, you need to ask yourself a few questions. Do you have the financial means to make a major purchase such as this? Do you have the discipline to make the required repayments?
When you buy a home, it's best to have a financial cushion in case difficult times arise. No one is immune from possible loss of income, an unexpected increase in expenses or rising interest rates.
After determining your financial means, meet with your lender or mortgage broker to review your options. They'll let you know what you need to do to get a mortgage pre-approval once you've found the property you want to buy.
It's a way to knowing ahead of time the amount your financial institution is willing to lend you to purchase a home. It also lets you know how much you can pay, what your interest rate will be for the loan term and how much your mortgage payments will be.
If possible, choose weekly or bi-weekly, rather than monthly, payments. By doing so, you'll pay off your mortgage faster and pay less interest!
The Home Buyers' Plan (HBP) allows you to use the money you've saved in your RRSP to purchase a qualifying home without having to pay tax. It's like an interest-free loan you give to yourself.
Under the HBP, each spouse can withdraw up to $35,000 from their RRSP without paying tax. Eligible amounts must have been contributed to your RRSP no less than 90 days before the withdrawal date.
In order to be eligible for the HBP, you must be considered a first-time home buyer. That being said, you can be considered a first-time buyer more than once in your lifetime.
You are considered as a first-time home buyer if you haven't lived in a home owned either by you, your current spouse, or your common-law partner in the four years leading up to the withdrawal.
You must also meet the following criteria:
For more information about all eligibility requirements, visit the Canada Revenue Agency.
If you have previously participated in the HBP, you may be able to do so again if your repayable HBP balance on January 1 of the year of the withdrawal is zero and you meet all the other HBP eligibility requirements.
You will need to put the money back into an RRSP over a maximum period of 15 years, repaying 1/15th of the total amount you withdrew per year. Your first repayment is due the second year following the year you first withdrew funds from your RRSP. So, if you take advantage of the HBP in 2023, your first year of repayment will be 2025.
By contributing to an RRSP+ with the Fonds, you'll benefit from an additional 30% in tax savings.1 And by reinvesting those tax savings, you can save even more and reach your goal that much sooner.
In addition to the tax advantages of an RRSP, you'll have access to mutual funds with a strong focus on Québec investments so that you can reach your goal while supporting the local economy. Contributions can be made through automatic or one-time bank withdrawals.
Not only is this possible, but it's also advantageous, since you'll benefit from an additional 30% in tax credits1. These savings will allow you to repay your HBP that much faster.
The Fonds de solidarité FTQ's shareholders will receive 15% in tax credits from the Québec government and 15% from the federal government. They are capped at $1,500 per fiscal year, which represents a $5,000 purchase of shares of the Fonds de solidarité FTQ.
Please read the prospectus before buying Fonds de solidarité FTQ shares. Copies of the prospectus may be obtained on the Website fondsftq.com, from a local representative or at the offices of the Fonds de solidarité FTQ. The shares of the Fonds de solidarité FTQ are not guaranteed, their value changes and past performance may not be repeated.
All the information and data provided on this website are for information purposes only; they are not intended to provide advice or recommendations of a financial, legal, accounting or tax nature with respect to investments. Although they are deemed reliable, no representation or warranty, express or implied, is made as to the accuracy, quality or completeness of this information and data. The opinions expressed should not be construed as a solicitation or offer to purchase or sell the units referred to herein and should not be viewed as a recommendation. We recommend you consult your advisor.
FlexiFonds de solidarité FTQ Inc.
The units of the FlexiFonds funds are distributed solely in Québec by FlexiFonds de solidarité FTQ inc., a mutual fund dealer wholly owned by the Fonds de solidarité FTQ. FlexiFonds de solidarité FTQ inc. does not distribute the units of any other mutual funds. Management fees and other expenses may be associated with mutual fund investments. Please consult your advisor and read the prospectus and the fund facts documents before making an investment. The FlexiFonds funds are not guaranteed, their values change frequently, and past performance may not be repeated.
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