If you are thinking about purchasing a home in 2019, you may be able to borrow up to $25,000 from your RRSP in order to help you make your down payment. Since it has become more difficult to purchase a home in recent years, due to rising house prices as well as the new federal financial stress test, the RRSP Home Buyer’s Plan (HBP) is becoming increasingly useful as a tool to get Canadians into their first homes.
The HBP allows you to borrow up to $25,000 from your RRSP within a calendar year to purchase a qualifying home. Multiple homeowners can participate together provided they meet all the criteria.
In most cases, when you get a mortgage, you will also need to get an appraisal. This is a professional assessment of the property’s value. Lenders often require appraisals before they will give a mortgage on a property because they want to be sure that the property is actually worth what they are lending.
Historically in Canada, those who opt for adjustable rate mortgages tend to pay less than those who opt for the more common fixed rate mortgages. An adjustable rate mortgage is one that has an interest rate that fluctuates with the Bank of Canada’s interest rate.
So if you do choose an adjustable rate mortgage, how do you know that you are getting the best possible deal.
For many in Canada, the dream of homeownership can be a difficult one to achieve – particularly if your credit score isn’t stellar. Rent to own can be a viable solution, allowing the tenant/buyer to live in a home that they love while they put away money for the down payment. The landlord/seller collects rent and after a set time period, they have a good chance of being able to sell the home to the tenant/buyer for a tidy profit. Ideally in this situation, everyone should come out a winner.
Unfortunately, rent to own has gotten some bad press in the past because like every other type of business transaction, it does have the potential to attract some scam artists. The good news is there are ways to protect yourself.