The following article is a guest post by Kyle Grooms, a financial security advisor in Toronto, and looks at tactical ways to use TFSAs and RRSPs to save for a down payment.
A common thread that ties recent generations is the desire to own a home. I feel this is a safe statement, however antidotal it might sound, considering conversations with grandparents, parents and peers. As a financial advisor working with young professionals, this seems to be their number one short-term financial goal. This article will focus on a strategy that will look to provide value and flexibility in people’s approach to saving for their first home.
After a review of some the rules and regulations associated with the First-Time Home Buyers’ Plan (HBP), some people may come to the conclusion that it is complicated and rigid in character. I think the HBP is a great way to save for the purchase of a new home for the average Canadian; however, I would not disagree with the above assessment of the program. A recent study by Canada Revenue Agency (CRA) indicated that close to 50 per cent of people do not replenish their RRSPs after withdrawing for a home via the HBP. This is likely due to two reasons: cash flow and not having the proper advice. Unfortunately, the result of not replenishing RRSPs defeats the original purpose of utilizing the HBP. Continue reading