RRSP Home Buyers Plan


Just saw this article from CNBC saying that 1 and 3 Millennials are making a big mistake withdrawing there retirement accounts to fund real estate purchases.  I think that article is wrong.  Millennials are our future and super smart.  They where practically born with an iPad in there hands.

In this video I will show you the 5 reasons why you should consider using your RRSP as your downpayment to purchase your home now. 

#1. High Tax Rates In Canada -  With our current tax rate I would says its very difficult to even save $1000 per month.  I mean our tax brackets here in Canada are excessive, plus you are also taxed again GST and PST on everyday purchases.   Your RRSP have been growing yearly because its the only tax savings vehicle we have aside from your TFSA’s.  

#2 Rental Rates are constantly rising.  This year, what we consider as affordable in vancouver west is $3,700 per month for a 3 bedroom, $2,700 for a two-bedroom and $1,900 for a one bedroom.

#3 You can borrow up to 25k tax free and if you have a spouse who is also a first time buyer he or she can borrow an additional 25k making that 50k.  

#4 Investment growth in the housing market is greater versus the returns you would receive from an RRSP.  On typical RRSP investments you can be lucky to earn 5% per year but that is only on the RRSP amount.   Condos in vancouver or have double in price over the last 10 years so its a smarter to use the RRSP funds to get into the market now versus later. 

#5 Payback time -  You will have 15 years to repay your RRSP loan with the first year being an exemption.  For example if you borrowed 25 thousand dollars that would be divided by 15, making that $1666 per year or $138 per month.  If you are not able to make the payments you would need to add this as your yearly income.   

Question of the day, would you consider using your RRSP to purchase a home?  Yes or No  Please leave it in the comments below. I will try my best to personally answer all comments myself.     

As always please like, share and subscribe and become smart savvy consumer.  I make educational videos every Tuesday and videos every Friday.  This is Alex from Vancouver and Thank you so much for watching this video.

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