Using your RRSP for a down payment

If you're a first-time buyer with a home purchase in your near future, you might want to consider taking advantage of the Federal government's Home Buyers' Plan (HBP).

In a nutshell, the HBP allows each buyer (provided they're both first-timers) to use up to $25,000 of their RRSPs as a down payment towards a home that is going to be their primary residence. This is a great opportunity for first-time buyers to accumulate a larger down payment than they would have been able to otherwise. That's because any money you put into an RRSP is tax-deductible. If you sock money away in it - and then sock away your respective tax return - the amount will quickly add up. It's also forcing you to save for retirement - something you may not be thinking about right now.


As for the details, the program is pretty straight-forward. Here's how it works:

- You're not required to pay taxes on the $25,000, as long as you pay the balance back within 15 years. You're required to start making payments in the second year after you purchase the home. Minimum annual payments are 1/15 of the total amount borrowed.

- If you're buying a home as a couple, and one person has already owned a home, then only one half of the couple is considered a "first-time homebuyer" and eligible for the program. The one exception is if the previous homebuyer sold their home a minimum of four years earlier and hasn't owned another one since. In that case, they're eligible again.

- The home has to be a primary residence, so you have to plan to live in the home yourself within one year of purchasing it or building it.


For more information on the HBP, visit the Canada Revenue Agency's website at: http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/rrsp-reer/hbp-rap/menu-eng.html or feel free to give me a call!

The Onset of Summer Spending

n the summertime - when the weather is fine - Canadians just don't like being bogged down with financial responsibilities, a new report reveals.


The TD Canada Trust Summer Spending Survey reveals that the majority of Canadians throw their budgeting (38%), saving (37%) and bill payments (50%) out the window in favour of taking advantage of the warmer weather.

While this is easy to understand, it's also easy to avoid. Below are a few tips to keep in mind:

1.    Set your budget in cooler months.
One of the best times to set a household budget is in the cold, winter months following the New Year - when your head is still throbbing from that holiday credit card hangover. At that point, it's best to set up a few different savings accounts - including one for Christmas/holiday spending and vacations. If the summer is a soft spot for you, why not sock a little bit extra aside for those care-free months as well?

2.    Take advantage of free activities.
While there are a lot of expensive things to do in the summer, there are also a lot more free activities as well! If enjoying the sun is your main priority, you can do that in a variety of ways - including those that are easier on your wallet. Instead of hitting a patio, why not host a BYOB barbeque at your place? Or keep an eye out for free summer concerts, fringe festivals and other forms of entertainment that seem to happen every weekend in the summer. If you have one nearby, a beach or pool is also a cheap way to keep cool.

3.    Automate those payments!
If your prime bill-paying time is on weekends, and if your weekends are taking you out of town, make it a priority to automate as many payments as possible. This is the best (and easiest) way to ensure you're getting those bills paid. While you're at it, why not automate your savings as well, before you have a chance to spend the extra cash on a patio somewhere?

Are Education Mortgages the next big thing?

With all the costs associated with day-to-day living - from mortgage payments to utility bills - it can be difficult to save for your child's education.
Canadian mortgage lender, XCEED, is hoping to make that task a little easier with its new Promoting Responsible Education Planning (PREP) Mortgage. The product is available to homeowners who have enough equity in their home to qualify for a refinance. By putting at least $1,000 of the funds borrowed into a Registered Education Savings Plan (RESP), you're automatically eligible for the PREP product.

In addition to saving five basis points off of XCEED's posted mortgage rate, the lender will also contribute $500 towards the RESP. With a starting point of $1,500 homeowners can then invest - and continue to contribute to - their RESP savings. With an RESP in place, the homeowners' children are also eligible for Canada Education Savings Grants (CESG).

The goal of the program is to make post-secondary education a little more affordable for Canadian homeowners and their children. For more information visit http://www.xceedmortgage.com/default.asp or give us a call!

Don't accept the first price upon renewal

Remember all the work and research that went into finding the best rate for your first mortgage? Whether you spent months making sure your credit was as good as can be, or spent hours on the Internet searching for the best rate, it seems silly to waste that effort by blindly renewing with your existing lender when your first term is up.


The truth is, the best lender is only as good as the term that you sign with them. When it comes time to renew, many offer their clients an inflated rate hoping that you'll be complacent enough to simply sign it back. Other clients particularly the new ones, or those that take the time to negotiate receive the lender preferred rate, which can sometimes be as much as half a percentage point lower.

While that may not seem like much now, it adds up over the life of the mortgage and almost certainly overrides any savings you experienced in that first term. For example, if you had a 25-year, $200,000 mortgage at the posted rate of 4.08% you would be paying approximately $1057 per month, compared to approximately $1,018 per month at the discounted rate of 3.72%. While this isn't a lot if you look at it from a monthly perspective, if you look at the long-term, you're paying $118,220 in interest on the higher rate mortgage, compared to $106,572 on the lower rate mortgage. That's a difference of $11,672.

Obviously you're likely not going to keep the entire rate for the life of a mortgage, but if the interest costs could be even greater if you merely renew at the going rate, term after term. That's why it's important to employ the services of a mortgage broker throughout your entire mortgage lifespan. Not only will this ensure you're getting the best possible rate available, but it will also give you the opportunity to see if there are other mortgage products in the market that are better suited to your changing needs