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The HBP, care to elaborate?
The HBP is the Home Buyers' Plan, designed for first-time buyers. This plan allows you to withdraw up to $35,000 from your RRSPs to make a down payment and achieve the dream of buying or building your first home. This is one of only three situations in which you can withdraw money from an RRSP, along with the LLP and, of course, retirement.1 1
The HBP is pretty straightforward: call your advisor, fill out some forms and receive up to $35,000 a few days later for your down payment!
1. Are there any conditions?
To get started, you need to meet a few important conditions:1
- You must have an RRSP.
- You must deposit the money into your RRSP at least 90 days before withdrawing it.
For instance, if you wish to withdraw $35,000 under an HBP on April 1, 2022, your RRSP should have a balance of at least $35,000 since January 2, 2022.
- This purchase must be for your first home, and you must have a written agreement to purchase or build this home before October 1 of the year following the withdrawal.
2. What do we mean by "first-time buyers" or a "first home"?
The HBP is about helping first-time homebuyers—getting their foot in the door, so to speak. But even so, there are a few things you need to know.
- First home: the HBP is for a first primary residence. This means you must reside in your new home within one year following your HBP withdrawal. So, it's not for buying a condo that you want to rent out. That being said, your home doesn’t have to be a house; it can be a duplex, single-family home, condo, etc.
- First time buyers: the HBP is for buyers who have never owned a home before, or who haven’t owned a home for five years.
3. What happens if you buy a home as a couple?
- To be eligible for the HBP, neither you or your partner must have owned a home in the last five years. This means that if you've never owned a home, but your spouse or common-law partner has owned a home in the last five years, neither of you will be eligible for the HBP.
- However, if you both meet the HBP conditions, you can combine your withdrawals and take out up to $70,000.
4. How do repayments work?
- You have 15 years to repay the money in full, without interest.
- Repayments are spread out, with a minimum annual amount.
- Good news: your repayment period doesn't start right away! In fact, it begins the second year following the year you withdrew funds from your RRSP under the HBP.
- For instance, if you withdrew funds in 2020, your first repayment year would be 2022. The Canada Revenue Agency calculates your repayment schedule by dividing the total HBP by 15 (annual payments).
As a savvy buyer, you've probably realized that your investment earnings can help pay for your home. And you’re absolutely right—if you’ve been wisely investing in your RRSP! That's exactly the kind of thing an advisor2 can help with (no kidding, they love it).
To participate in an HBP, you need to have savings in a Registered Retirement Savings Plan, aka RRSP. This tax-deferred savings plan is used to put money aside for retirement, to buy a first home or go back to school. While contributing to your RRSP, you also reduce the amount of income tax you pay each year1.
The capital in your investment accounts is safe! In the event of your death, your beneficiaries recover the money invested before age 75, even if markets have gone down. And, if the markets were in your favour and the final balance exceeds the invested capital, your beneficiaries will get it all back (capital + gains).
We take great care in proposing diversified investments adapted to your profile.2
Investing with an insurer means you can designate a beneficiary to receive the balance in your account in the event of death.
You can rest easy. Assuris provides deposit coverage of up to $100,000 per account category.3
Get a tailor-made projection of your retirement income thanks to our tool designed specifically for your retirement plan (RREGOP or PPMP). And for steady RRSP contributions made easy, go automatic with payroll deductions4 and watch your savings grow.Find an advisor