RRSP Home Buyers Plan - personal use

Matt Crowley

Senior Forum Member
Registered
Dec 14, 2013
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#1
I'm looking for a mortgage broker who can help me figure out the eligible funds I have for the RRSP home buyers plan. I called Dan Heon's guys and they said go look on the internet. I want a guy who will fill out forms, investigate, and basically provide a service. If I have to fill out all the forms myself, I might as well go direct to the banks in my opinion...

Wondering if there is a mortgage broker who helps you with this part or if I have to do all the work myself. In Alberta but I don't know if that matters.

Personal mortgage, no investment portion, nothing funky.

Thanks
 
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ThomasBeyer

Senior Forum Member
REIN Member
#2
Are you asking to withdraw funds from an RRSP to fund the first time purchase of a residence ? Or are you asking to use your RRSP to fund a mortgage on your property ?

In any case, why not peruse your RRSP trustee’s website or call your RRSP trustee. Not every trustee allows a mortgage though and as such you may have to move funds to another trustee.


OlympiaTrust is such a trustee and their forms and more info on RRSP mortgages is here https://rsp.olympiatrust.com/mortgages.html
 

Michel Lafleur

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Apr 30, 2015
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#4
My understanding is that you cannot use registered funds for any type of personal property purchase. You can lend yours out (an "arms-length" mortgage), or you can borrow registered funds from somebody else. In a perfect scenario, you could lend yours to someone, and borrow theirs for your purchase.
For any type of registered funds financing, my top recommendation is Shaune Impey; he has the knowledge and his ego doesn't get in the way of doing what it takes (such as filling out the paperwork) to get a deal done.

Shaune Impey @ River City Financial
780-887-9513
shaune@rivercitymortgages.ca
 
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Matt Crowley

Senior Forum Member
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Dec 14, 2013
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#5
Hi Michel, thanks, I'll give Shaune a call!

FYI... on the RRSP Home Buyer's Plan, yes it can be used as source of a downpayment: https://www.rbcroyalbank.com/mortgages/rrsp-home-buyers-plan.html?refmenu=help

What is the Home Buyers' Plan?
With the federal government's Home Buyers' Plan, you can use up to $25,000 of your RRSP savings ($50,000 for a couple) to help finance your down payment on a home.

Advantages
Using your RRSP's as a down payment may be a great option as you have the ability to draw from some of your existing resources and it might possibly allow you to accumulate the 20% down payment needed to avoid having to pay default insurance premiums. Even if you already have enough money for your down payment, it may make sense to access your RRSP savings through the Home Buyers' Plan.
 

Michel Lafleur

Frequent Forum Member
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Apr 30, 2015
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#6
Interesting share Matt.
I haven't heard of people using RRSP's for personal purchases (yet.)
Im assuming this is for a primary residence only? The link only said towards the purchase or build of a home.
If one can use registered funds towards a down payment for a rental/investment property - that should add velocity to some client's portfolio growth.
I also like the idea of the RRSP down payment being tax deduction for the year, every penny counts in this economy.
 

Angelo1

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May 16, 2018
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#7
Hi Matt, to answer your question yes you can use your RRSP as a downpayment using the first time home buyers plan option. You will need to pay that back though within (10 years I believe) to avoid paying any tax on that money. You can access the funds through the institution you hold it with. Speaking from experience. Used this plan in the past.


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ThomasBeyer

Senior Forum Member
REIN Member
#8
Home buyers plan, so it is the down payment.

I want a mortgage broker to do the work.
Get a normal mortgage that any decent mortgage broker can get for you, but cash down comes from RRSP ( and takes a bit of time say a week or 2). Trustee that holds your RRSP will know what form to fill out to get cash out of RRSP. Needs to also be reported to CRA every year until repaid otherwise penalties apply. https://www.canada.ca/en/revenue-ag...buyers-plan/participate-home-buyers-plan.html


Thomas Beyer, Asset Manager, Investor, Community Improver, Author, Father, Mentor www.prestprop.com
 

Havan8655

Focused Investor
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May 3, 2016
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#9
Are you asking to withdraw funds from an RRSP to fund the first time purchase of a residence ? Or are you asking to use your RRSP to fund a mortgage on your property ?

In any case, why not peruse your RRSP trustee’s website or call your RRSP trustee. Not every trustee allows a mortgage though and as such you may have to move funds to another trustee.


OlympiaTrust is such a trustee and their forms and more info on RRSP mortgages is here https://rsp.olympiatrust.com/mortgages.html
Canadian western trust does both arms length and non-arms length (where you can lend your own RSP funds for your purchase) whereas olympia trust does only arms length mortgages (where you can lend your RSP funds to others)
 
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Alvaro Sanchez

Ottawa-Gatineau Investor
Registered
Jun 5, 2009
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AlvaroSanchez.ca
#10
1) The RRSP home buyers plan is a specific program for people to buy a house. That is, to use a portion of own RRSP as down-payment AND bank mortgage. This is limited to your principal residence (from what I remember).

2) The other aspect is that you can become a bank and lend your RRSPs as a mortgage to you (non-arms length) or a third party (arms-length) as investment. The rules and regulations are different for both and you need a self-directed RRSP account and a trustee.

So what's your questions? 1 or 2?
 

ThomasBeyer

Senior Forum Member
REIN Member
#11
Interesting share Matt.
I haven't heard of people using RRSP's for personal purchases (yet.)
Im assuming this is for a primary residence only? The link only said towards the purchase or build of a home.
If one can use registered funds towards a down payment for a rental/investment property - that should add velocity to some client's portfolio growth.
I also like the idea of the RRSP down payment being tax deduction for the year, every penny counts in this economy.
It’s a tax and interest free loan basically that has to be repaid, otherwise tax penalties apply. The cost is the foregone tax free upside within your RRSP of the money taken out. This has to be compared to potential (tax free) upside on the house acquired.

We did that for our first home purchase in Ontario in the early 1990s.


Thomas Beyer, Asset Manager, Investor, Community Improver, Author, Father, Mentor www.prestprop.com
 

Matt Crowley

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Registered
Dec 14, 2013
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Calgary
#12
Thanks everyone, yes it is a slick program and pretty essential for building personal net worth. Yes, the rules require repaying the RRSP down payment funds or face penalties. However, I hope that most in this forum realize that they should be maxing out their RRSPs and TFSAs before they jump into other alternative investments (or do alternatives through RRSPs and TFSAs). Deferring 30%-50% tax for 10-30 years is virtually unbeatable at a risk-adjusted rate, doesn't matter if you plug the RRSP funds into low risk fixed income, you will beat equity returns using after-tax dollars.

For now, gains on personal residences is not taxed. This is an essential, legal tax shelter storing wealth for Canadians. It is another way to build personal net worth in my books and I certainly plan to repay the RRSP as soon as possible, as I believe RRSPs are unbeatable.

@Angelo1 did you have to organize the Home Buyers RRSP yourself? What steps did you have to take? How long did it take to line up? Any closing issues / timing items to be concerned with? To what extent did you mortgage broker help get this arranged? I've been pretty disappointed with the service I get from mortgage brokers.

When I refinanced a rental in Edmonton recently, the broker didn't even shop the market and when I asked them for a better rate, they came back with "oh like this one that is 25 bps lower?" Uhhh... duh. And they are a BIG group. Surprised I can't find a better option honestly.
 

Matt Crowley

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Registered
Dec 14, 2013
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Calgary
#13
My suspicion for why service is so bad for residential mortgage brokers is that the value add the brokers add is making it easier for the banks to review the mortgage docs. But the customer actually does all of the work for the broker... they fill out the forms as the customer, get all the documents together as the customer. From experience, once you get all the documents together, any bank will actually do the work themselves to dig through it and give you quote. So, I'm honestly a bit baffled by how low the standard has become for residential mortgage brokers. If the customer does all the work, why not keep the value of that commission and give me a better rate on the loan? I don't think the value is translating down to the the customer any more.

On my above example refinancing my home, when I contacted a local bank myself, I got a better rate then the broker could find in the ENTIRE market...uh huh. That makes super sense.

For the record, I think commercial mortgages are a different ball game. Brokers are dealing with something considerably more complex and can be a lot more challenging to bring lenders to the table.
 

KhoaN

Inspired Forum Member
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Oct 22, 2012
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Alberta
#14
Hi Matt,
The form that you need to fill out is T1036, very simple to fill out. Once you have an offer and all conditions lifted, bring the form to the institution that has your RRSP. In the form it is kindda vague that even you could have multiple rental properties but if this house is your first principal home or if you haven't owned a principal home in the last 5 years then you could be eligible. Make sure your spouse is subject to the same condition.
You and your spouse could borrow up to $25,000 each interest/tax free. The government allows you to skip 1 calendar year after your purchase, then start paying back 1/15 every subsequent years for 15 years. You don't have to pay it back, if you don't pay back in particular year, that 1/15 portion will be added on to your income of that year and will be taxable. So if in the year, you have low income or no income, you could just skip it. You could repay as fast as you want.

Hope that helps.

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