Your Financial Goals

Buying a Home

There are many aspects of your financial position that need to be considered when preparing to buy a home. For detailed information on cost considerations and mortgage financing, the CMHC website has useful tools available.

Home Buyer’s Plan

When preparing or contemplating the purchase of your first home, an excellent option to consider is the Home Buyer's Plan. This plan allows you to use RRSP funds, up to $25,000 per spouse, towards your down payment or any costs incurred in conjunction with your first home purchase. These RRSP contributions can save you up to $11,500 (income tax at 46%) versus saving up the money outside of an RRSP. The Home Buyer’s Plan requires the contributions predate the withdrawal towards home purchase by at least 90 days.

Tax Free Savings Account

The balance of your down payment can be saved within your Tax Free Savings Account to maximize after tax returns. TFSA

Term Life Insurance

Consider Term Life Insurance over your lending institution’s mortgage insurance by taking a careful look at the two products side by side. Term Insurance offers you flexibility and coverage that is likely to greatly overshadow the standard mortgage insurance offerings. Term Life Insurance can be tailored to fit your coverage requirements as, frequently, members have found that they can obtain double the coverage for their family and heirs at a lower cost than the mortgage insurance protection for their lender. For more information, you can take a look at a side by side comparison in this informative brochure. In addition, the CBC produced an informative segment on this area and this article from the Globe outlines the considerations .

To build confidence in your ability to afford the costs associated with purchasing a new home, you may be interested in establishing regular RRSP, TFSA, and, if necessary, non-registered incremental investments on a monthly basis equivalent to the amount of mortgage, taxes, utilities and incidentals to be paid upon purchasing and owning your new home. This strategy not only builds your confidence, but establishes your down payment for when you are ready to move forward with purchasing.

You may also wish to check the  MLS website to get an idea of what residential real estate your combined down payment and eligible mortgage will permit you to purchase in the different communities you are interested in.
Real estate can provide an excellent investment with Canadian prices increasing an average of about 5.6% over the long term versus 7% from bonds and 10% from equities (andex chart).