This post is the result of a meeting I had with some mortgage brokers from BMO last week…
Most of us have heard of and/ or are familiar with the Government of Canada’s Home Buyer’s Plan (HBP) that allows first-time home buyers to withdraw up to $20,000 from their RRSPs to buy or build a qualifying home for themselves or for a related person with a disability.
The purpose of this post is to let you know about a creative way that BMO has come up with to help you maximize your down payment in the shortest period of time…
Here’s how they suggest doing it:
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Borrow up to $20,000 from BMO to purchase an RRSP;
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At day 91, redeem the $20,000 RRSP under the Home Buyer’s Plan and pay off the BMO loan (estimated interest cost for loan is $300);
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If you are in a 35% tax bracket, the tax deduction you will receive for the $20,000 contribution will be approximately $7000.00;
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If you and your partner were both to do this, you would receive $14,000 in tax deductions (potential refund), that you could use as the down payment toward your home.
Obviously the above information is generic and is for illustrative purposes. Contact me directly and I will put you in touch with my BMO contacts so you can determine if this is an option for you…
///…CP
