Several conditions apply so before you delve into your RRSP make sure you meet said conditions.
- You must be a Canadian Resident.
- The portion of the RRSP you plan to use towards the purchase of your new home must be in your RRSP account for more than 90 days.
- You must be a first time home buyer. (You or your spouse/common-law partner have not owned a home for at least four years before the date of the RRSP withdrawal.)
- A written contract for the home’s purchase is mandatory.
- You must use the home as your primary residence.
Before you jump into the HBP head-on please consider all the advantages and disadvantages of using money from your RRSP to fund your down payment. Ask yourself this: Will you be able to repay the amount you withdrew from your RRSP in the next fifteen years? Also, consider that your RRSP is not taxed until you start drawing to fund your retirement, which means that it can grow at a much faster rate in comparison to a personal investment you will pay taxes on. Basically, if you’re young and ready to purchase your first home but can’t come up with the down payment on your own and don’t foresee any problems repaying the loan within the next fifteen years, then the Home Buyers Plan is right for you.