First time buyers: Make the most of the Home Buyers Plan

If you're a first time homebuyer, you can use the federal Home Buyers Plan (HBP) to take out funds from your registered retirement savings plan (RRSP) to use towards the purchase of a qualifying home. 

The Plan allows first time buyers to withdraw up to $25,000 from their RRSP (or, up to a maximum of $50,000 per couple) tax free, and have 15 years over which to pay the funds back into their RRSP. 

While 44 percent of first-time homebuyers are using the HBP to make a down payment, 46 percent of recent first-time buyers have no RRSP savings to use toward a down payment, according to mortgage insurer Genworth Financial Canada. If you do not have RRSPs, we can show you how to establish an RRSP with borrowed funds, and use the resulting tax refund for a down payment or a lump-sum mortgage payment.

If you or someone you know would like to learn more about the HBP or about saving for a down payment, talk to me. Also, www.Moneytools.ca from the Financial Consumer Agency of Canada has useful information on making a budget and sticking to it.

Bank of Canada maintains key rate

The Bank of Canada today announced that it is maintaining its key policy rate.  In its statement the Bank said that it expects a weaker international outlook "to dampen GDP growth in Canada through financial, confidence and trade channels. The economy also continues to face competitiveness challenges, including the persistent strength of the Canadian dollar." 

The Bank also said that it expects that the inflation rate in Canada will continue to decline owing to "reduced pressures from food and energy prices and ongoing excess supply in the economy."

The prime rate at most lenders will stay at 3.00%, which means those with variable-rate mortgages will still enjoy relatively low rates.  A new variable-rate mortgage can in many cases be obtained by qualified borrowers at Prime minus 0.20%, or 2.80%.  Home equity lines of credit and variable-rate credit cards are also typically linked to the prime rate.  The pricing for new fixed-rate mortgages is influenced by trends in the bond markets, rather than the central bank's key policy rate.

  

The Bank's next rate announcement is scheduled for January 17, 2012.

 

For more information on current interest rate trends, and the mortgage that fits your life, please contact me.