Struggling with your mortgage down payment? With the insights and strategies provided below, you CAN move forward! We can create a financial plan to turn your dreams a reality.
Make Saving Simple and Stress-Free
Decide how much you need to save. Use the total down payment, minus lump sums you expect to receive from other sources, then divide by the number of your paychecks until the date you plan to buy.
Select the right account to use for your “Home Purchase.”
Set up a pre-authorized monthly transfer from your chequing account to the account. Pro Tip: Automating deposits into accounts not only builds your down payment but helps your money grow faster. This ensures you’re consistently saving without needing to remember each month.
Grow Your Money with Registered Account Options
FHSA (First Home Savings Account):
If this is your first home you can open this account today! Save up to $40,000 ($8,000/year) toward your home purchase.
Contributions are tax-deductible, and withdrawals are tax-free.
Repayment is NOT required.
Funds can be transferred to an RRSP or RRIF if not used for a home.
Learn more about the FHSA here. If you don’t qualify for the FHSA your savings invest inside your TFSA or RRSP.
TFSA (Tax-Free Savings Account):
Grow your savings tax-free if you don’t qualify for the FHSA.
Use it as a flexible tool for to grow your savings.
Learn more about the TFSA here.
RRSP Home Buyers’ Plan (HBP):
If you have been stashing cash into your RRSP you can withdraw up to $35,000 tax-free for your down payment.
You need to repay within 15 years to avoid taxes. It's simple! Make contributions to your RRSP before February 27th each year, ensuring it's enough to cover the HBP amount, which can be up to $2,333 per year.
Learn more about the Home Buyers’ Plan (HBP) here.
Latest Update: Temporary repayment relief is available to defer the start of the 15-year repayment period by an additional three years for participants making a first withdrawal between January 1, 2022, and December 31, 2025. Accordingly, the 15-year repayment period would start the fifth year following the year in which a first withdrawal was made. For example, if you made your first withdrawal in 2022, your first year of repayment will be 2027.
Investing and planning the way it should be done!
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ADDITIONAL SOURCES
Down Payment Assistance Programs (DPAPs):
Explore federal, provincial, and municipal incentives like tax rebates and grants for first-time homebuyers.
The B.C. Home Owner Mortgage and Equity (HOME) Partnership will provide down payment assistance to first-time home buyers with less than 20% down. They will contribute up to the amount you have already saved for a down payment with a loan that is interest-free and payment-free for the first five years.
Check with your lender first to ensure they will accept borrowed down payments such as this program is offering.
Learn more about the B.C. Home Owner Mortgage and Equity (HOME) Partnership here.
Your Current House Sale Proceeds:
Sale Proceeds: The amount available from your sale isn’t your full selling price.
Deductions include:
Outstanding mortgage balance.
Early discharge penalties (if applicable).
Legal fees and closing costs.
Realtor commissions.
What if You Can’t Sell in Time?
Consider using a Home Equity Line of Credit (HELOC) or a bridge loan to meet your down payment needs.
Keep in mind that these loans can affect your debt servicing ratios, so consult your lender for guidance.
CASH BACK (REBATES):
GST Housing Rebate
For newly built homes, first time home buyers are able to apply for a GST credit from the government and/or the developer.
The GST in BC is equal to 5%, and as a home buyer you may be eligible for a rebate of 36% of the 5% GST.
There is a full general rebate for homes that are under $350,000 that a buyer intends on living is an his/her permanent residence, and there are partial rebates up to $450,000.
Learn more here.
Home Buyers’ Amount (HBA) OR First Time Home Buyer’s Tax Credit
It’s a non-refundable tax credit that allows purchasers to claim an amount of $10,000 on their tax return during the year they purchase their home.
It helps offset legal fees, inspections, and other similar closing costs.
The maximum tax credit that you can receive is $1,500.
Learn more from CRA - Line 31270 – Home buyers' amount.
Take the first step toward financial freedom by booking an online or in-person appointment. Invest in low-cost, easy to access ETFs. Together, we’ll create a plan to help you get into your home!
Smart Tip: Practice the Commitment
Calculate your anticipated monthly mortgage payment (e.g., $1,500/month).
Compare it to your current rent (e.g., $900/month).
Save the difference ($600/month) for 6 months to test your budget readiness.
Latest update:
In addition to longer amortization periods, the government will also increase the limit for insured mortgages. Starting December 15, 2024, the insured mortgage cap will rise from $1 million to $1.5 million. The extension of insured mortgage amortizations and the increase in the mortgage insurance cap will give many first-time buyers a much-needed boost in accessing the housing market.
Check in next week to find out how your family can help!
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