For First Time Buyers ... To Buy or Not to Buy An RRSP to help with your down payment.
Saving for a Down Payment is difficult for most First Time Buyers - and as a realtor its our job to help find all the government programs available to squeeze every dollar we can for our clients.
One way to increase a downpayment is to put RRSP's to work. By taking available cash and purchasing an RRSP the Government will provide a sizable tax credit on a buyers next tax return. But remember timing is everything! When purchasing an RRSP in September through to February, you don't have to wait long for your TAX CREDIT -- when you file in March or April the credit comes fairly quickly. However if you miss the February deadline - the buyer will have to wait until the next fiscal tax year to receive the credit on his next return.
Taking an RRSP loan out is also a good way to help build a downpayment.
Here are some helpful calculators to analyse a buyers options:
Basic Calculator to figure out how much rrsp rebate you will most likely get - see what tax credit to expect on a $10,000 RRSP:
Royal Bank RRSP Loan Calculator - Rate to Borrow estimated at 4.75% (as of Oct 2012)
Loan calculator - what monthly payment suits you best - keep in mind you will receive a big tax credit that can be put towards paying off the loan faster:
Ontario Tax Calculator to see your tax bracket (general purposes only for tax planning):