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.
One great way is to make an RRSP part of your down payment saving strategy. It’s true - putting aside a small amount every week in an RRSP can help you build your down payment faster.
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 federal program lets you borrow funds from your Registered Retirement Savings Plan (RRSP) to purchase your first 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 (at least 1/15 of the funds must be repaid each year, beginning two years after the withdrawal). Your RBC advisor can help you figure out the easiest repayment strategy
Start now and watch your savings grow.
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 $14,761* in 5 years.
Set it and Forget it
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! Tools like the RBC RSP-Matic® make setting this up easy.
Want to learn more?
Try the RSP-Matic Calculator to see how much you could save by contributing to an RRSP monthly. (tip: Instead of entering your desired retirement age into the calculator, enter the age at which you want to buy your first home).
Talk to an RBC advisor about an RRSP and the Home Buyer’s Plan today!
* This example assumes a 5% annual rate of return in a Registered Retirement Savings Plan. Example is strictly for illustrative purposes only and is not intended to be representative of the performance of any actual or future investment available to investors. Actual client returns may differ substantially. Financial planning services and investment advice are provided by Royal Mutual Funds Inc. (RMFI). RMFI, RBC Global Asset Management Inc., Royal Bank of Canada, Royal Trust Corporation of Canada and The Royal Trust Company are separate corporate entities which are affiliated. RMFI is licensed as a financial services firm in the province of Quebec.