Isn't an RRSP just for retirement?
If you’ve started thinking about buying your first home, you have most likely also started thinking about the fastest way to save for your down payment.
A Registered Retirement Savings Plan (RRSP) can be used to help you save for more than just retirement. Through the Home Buyer’s Plan, you can borrow up to $35,000 from your RRSP to use as a down payment on your first home.
How does The Home Buyer's Plan work?
This is a federal program that allows you to withdraw funds from you RRSP to buy a home. Here’s how it works:
- You and your spouse can each withdraw up to $35,000 from your individual RRSPs to put towards a down payment
- You pay no interest on the money you borrow from your RRSP
- Your withdrawal is not taxable as long as you repay the money within a 15-year period
Regular small deposits add up to a large down payment!
Setting up regular automatic contributions every time you get paid is a great way to save – because it happens automatically you might not even notice it – except when you start to see your savings build!
Even a small amount invested in an RRSP regularly (weekly, monthly, etc.), can grow into a large down payment over time. Start with $50 a week or another amount that fits your budget.
$50 a week can grow to over $15,000 in 5 years.