By Mark McLean, TREB President
You’ve cut back on your daily double soy lattes, your impulse buying and even cut down your overall debt, but you may feel like you are no closer to owning your own home. For first-time home buyers, saving for your down payment doesn’t have to feel like a dream.
There are ways to reach your ultimate home buying goal. While you may need to consult with a financial advisor in regard to your individual savings plan, there are a few programs to consider that may help build your nest egg.
The Home Buyers Plan (HBP)
This program allows you to withdraw up to $25,000 from your Registered Retirement Savings Plan (RRSP) to buy or build a qualified home. Your RRSP issuer will not withhold tax on withdrawals that meet applicable HBP conditions. Before you can withdraw funds, however, you must have entered into a written agreement to buy or build a qualifying home which you must occupy no later than one year after buying or building the home. An interesting point: If you are buying a qualifying home together with your partner or other individuals, each of you can withdraw up to $25,000. That can certainly help build up the funds required for your down payment.
CMHC’s Mortgage Loan Insurance Program
If your down payment is less than 20 per cent of the value of the home you want to buy, you can take advantage of this program. With as little as five per cent down payment (on the first $500,000 of the purchase price) from personal or other sources, home buyers have access to mortgage insurance, as long as you can meet the standards for a five year fixed-rate mortgage. The mortgage insurance protects only the lending institution in case of default, and is usually added to the overall total loan amount to be amortized. This support is available to both first-time and repeat home buyers, and can certainly help lower your overall cost of entry into the market. In fact, in 2014, CHMC insured more than 308,000 housing units.
Be sure to explore your real estate options as well. Is a condo a possibility? Expanding your neighborhood search? Completing your own upgrades over time? Paring down your wish list for that fireplace or extra bathroom? Your REALTOR® has the expertise to run you through all the options so that you can make an informed choice, and find the ideal house for your lifestyle.
For more details on any of these programs, and for rebates you may be entitled to after you have purchased your home, talk to a Toronto Real Estate Board Professional REALTOR® or visit www.TREBHome.com for updates on the market. If commercial property is what interests you, contact a TREB Commercial Professional Member REALTOR® by visiting www.trebcommercial.com.
