A home of your very own!
With the RRSP+, it's easier to finance the purchase of your first home.
With the Home Buyers' Plan (HBP), you can use your RRSP+ as a down payment.
How can you finance the purchase of your first home?
Here’s some useful information to help you achieve your goal:
Buying a home is an important decision.
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?
- Determine your ability to pay over the short and medium terms, the financial obligations related with the purchase of a property. Since the mortgage repayment will be a big part of these obligations, it's important to have a clear idea of your financial situation.
- Draw up an accurate account of your financial inflows and outflows over the last 12 months. Doing so will allow you to determine the amount that you can allocate to the repayment of your mortgage each month.
- You can also hire a financial advisor to help you accurately determine your borrowing capacity.
- You may also want to meet with a real estate agent, who can guide you through the purchase process.
Prepare for the unexpected.
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.
What’s a mortgage pre-approval?
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!
What’s the HBP?
The Home Buyers' Plan (HBP) allows you to use the money you accumulate in your RRSP to buy a first home without having to pay tax. It's like an interest-free loan that you make to yourself.
Raise your down payment more easily with the RRSP+
With the additional 30% in tax savings* you get thanks to an RRSP+ with the Fonds, in just five years, you could raise $25,000 by spending only $8,220 out of pocket, after your tax refund.** You’ll have saved more than $16,780! Compared to a regular RRSP, you can achieve your dream of owning a home at a lower cost.
How much money can I withdraw through the HBP?
Each spouse who is a co-owner can withdraw up to $25,000 from their RRSP without paying taxes. Be aware that the amounts available for withdrawal are those contributed to your RRSP+ for at least 90 days.
How does the HBP work with an RRSP+ with the Fonds?
When you’re ready to start the process, contact one of our Shareholder Services agents at 1 800 567-3663. They’ll be happy to answer your questions and send you the documentation you need.
You can also refer to our FAQ for additional information.
After choosing the HBP, it’s time to think about paying the money back into your RRSP.
You must pay back the money you withdrew from your RRSP over a maximum period of 15 years, by paying back 1/15th of the amount each year.
Did you know you could pay back your HBP at the Fonds no matter which financial institution you took it out with? To learn more, refer to our FAQ or contact one of our Shareholder Services agent at 1 800 567-3663.
*The tax credits granted to the shareholders of the Fonds are 15% at the federal level and 15% at the provincial level. Tax credits are capped at $1,500 per tax year, which corresponds to purchases of Fonds de solidarité FTQ shares having a value of $5,000.
**Example based on the 2017 tax year, for an individual with an annual taxable income of $50,000, at a marginal rate of 37.12%. The calculated amounts are estimates and may vary according to your tax situation.
With the RRSP+, it’s easier than ever to buy your first home.
Make the most of the benefits of your RRSP+, and become a homeowner for less.
Enjoy additional tax savings
Raise your down payment faster
Become an owner earlier than you thought
How to contribute less yet make the most of the HBP
Contribute $5,000 a year and accumulate $25,000 in five years for a net out-of-pocket cost of $8,220!
Annual taxable income: $60,000
Family status: In a couple, about to become a father
Goal: To buy his first home
Marc wants to save $25,000 in the next five years, and then take advantage of the Home Buyers’ Plan to buy his first home. To this end, he decides to contribute $5,000 to his RRSP+ each year. In real terms, thanks to the additional 30% in tax savings, the $25,000 will only cost him $8,220, which after five years represents $16,780 in tax savings.
Most Frequently Asked Questions
Interested in the HBP?
Contact Saving Services to get all the documentation you need and have your file assessed.
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