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How to get the most out of the RRSP Home Buyers Plan (HBP)

Tuesday, 13 April 2021

An RRSP or Registered Retirement Savings Plan is the traditional tool that Canadians use to save for retirement. It offers tax-deferral on contributions as well as any interest your account receives. That means you can rack up some serious compound interest on your savings before paying tax. You will only have to pay tax on the funds that you withdraw from the RRSP in the future when you retire.

But the RRSP has another trick up its sleeve, you can it for your entire or partial down payment on your first home?

Typically, the funds in your RRSP stay there until you retire, as there are tax penalties for earlier withdrawals. However, the RRSP Home Buyers Plan (HBP) is an exception to that rule, at least for first-time home buyers. With the Home buyers plan, you can withdraw up to $35,000 from your RRSP for a down payment on a home, which can expedite home ownership without sacrificing your retirement. The only caveat is that you must pay back the amount within 15 years.

If you’re thinking of using the RRSP for your next home purchase, here are the top things to know first before making a withdrawal.

The maximum Size of the Withdrawal (Good news! It’s per person!)

The HBP lets you withdraw a maximum of $35,000 from your RRSP. If you’re buying your first home with your partner (or another first-time home buyer) then that amount is double, you can withdraw a maximum of $70,000.

You can withdraw from multiple RRSPs as long as they are in your name but cannot exceed the maximum of 35,000 unless you are purchasing with a partner or another first time home buyer.

Don’t Forget the 90-day Withdrawal Rule

Any funds you withdraw from your RRSP must have been in your RRSP account for minimum 90 days regardless of its intended use (ex. Home Buyers Plan, Lifelong learning plan, etc.) Make sure whatever funds you are withdrawing from your RRSP have been in your account for at least 90 days, otherwise it may not be tax-deductible for that year.

When You Can and Cannot Make a Withdrawal

You can apply to make a withdrawal from your RRSP before you build or buy a home, with some conditions. First, you must already have a written agreement to buy or build a home when you make the withdrawal. As well, you will need to be a Canadian resident at the time you make the withdrawal, including up to when the home is built or bought.

Another helpful fact is that you can also make the withdrawal AFTER you buy or build the home, but there is a time limit. You must withdraw within 30 days of the possession date. Wait any longer than 30 days and your withdrawal won’t be eligible for the HBP and you will be taxed on the amount you withdrew.

You Can Withdraw From Multiple RRSP’s

That’s right! You can withdraw from multiple RRSPs, as you are the owner of each plan. Make sure to stay within the limits per person ($35,000 CAD). Also, keep in mind that it’s generally not possible to withdraw from locked-in RRSPs or a group RRSP.

To make a withdrawal, first complete a T1036 form for each RRSP you want to borrow money from, and submit each form to the issuer of your RRSP (ex. if you have RRSPs at both ATB and Scotiabank, you will need to submit a separate T1036 form to each bank. Make sure to also submit each of your T1036 forms at the same time to ensure you claim the full HBP amount you borrow in one calendar year on your taxes for that year.

Although the entire HBP amount needs to be withdrawn and claimed on your tax in the same calendar year, there is one small exception. If you make a withdrawal in one calendar year and a second withdrawal in January of the following year, the CRA (Canada Revenue Agency) will consider the latter withdrawal to have been made in the same calendar year as the initial withdrawl.

Repaying it Back…

This part deals with paying back what you withdrew in the beginning. First off, your first repayment is not due until 2 years after you made your initial withdrawal. And the full amount must be repaid within 15 years. Now you can start making repayments anytime, and you can even repay the full amount early with no penalty, but these are the minimum repayment requirements.

One thing to note is if you do pay more than the minimum, your remaining balance for future years will be reduced. The amount that you have to repay each year is equal to 1/15th of the total amount you borrowed from your RRSP. You’ll be able to find your full repayment schedule in your CRA My Account. The CRA will also send you a yearly Home Buyers’ Plan statement of account.

What Happens if I Don’t Repay On Time?

It’s best to at least make your minimum payments on time. If you don’t, you will have to include the missed amount you did not pay as RRSP income on your taxes. To do this, subtract any amount you did repay from your minimum repayment amount and put the answer in-line 129 on your next return. This amount will be taxed negating the purpose of this tax-free loan! Also, your HBP balance will be reduced accordingly.


That’s it! You are now an expert on the Home Buyers’ Plan! As a first-time home buyer, it can be difficult to save for a down payment. But if you’ve been diligent with contributing to your RRSP, then the Home Buyer’s Plan might just be the best way to complete your down payment.

Your mortgage broker will also be a valuable resource for outlining how and when to utilize your RRSP savings and helping you understand the program in its entirety. For a full list of qualifying conditions for the RRSP HBP, as well as a list of important dates, visit the CRA website.

How to Apply for a Mortgage During the Pandemic

Tuesday, 30 March 2021

When it comes to employment and having the means to finance your new home purchase, 2020 was a rough year for a lot of people. Interruptions in work, applying for CERB, and getting switched to EI, to name just a few. A lot has changed about getting a mortgage during the pandemic. Most notably, there are extra considerations to account for before getting pre-approved, especially if you were affected financially by the pandemic.

Here is the scoop on things you need to consider before getting a mortgage and how COVID might impact each step.

Get an Updated Credit Report.

Your credit report is a profile of your credit history and is maintained by Canada’s credit reporting agencies, most notably TransUnion and Equifax. You can request your credit report for free once per year from each credit bureau. Another option is to pay for it, which will give you access to both your credit report and credit score.

What is a Credit Score?

Your credit score is a number between 300 and 900 and is used by Lenders to gauge your creditworthiness. The higher the number, the better. They use your credit score and your credit report to determine whether to lend to you. Your credit score also determines what interest rate you can qualify for. Ideally you want your score to be over 650 to get the best rates. A higher mortgage interest rate can add hundreds of dollars in interest charges to your monthly mortgage payment, so it is essential to check your credit report/score before applying for your mortgage. Depending on the number, your mortgage specialist may require you to improve your credit rating before formally applying for financing.

Checking your credit score on a weekly/monthly basis and requesting copies of your credit report is smart, but it is an even smarter choice during the pandemic. If, during the pandemic you experienced unemployment, you might have missed your monthly payments or perhaps taken on debt on credit cards which are most likely the highest interest instruments you pay on. If so, your credit score might have decreased, meaning you won’t qualify for the lower interest rates on your mortgage, costing you hundreds or even thousands of dollars throughout the term of the loan.

Rebuilding credit is something that you can do right away. Start rebuilding your credit score by ensuring your monthly payments are made. One tip is to split the payments in two. Ex. If you have a credit card payment of $100 dollars due at the end of the month, pay $50 on the 15, and the remaining $50 at least 5 days prior to the due date. By doing this, it will show up as two payments and accelerate rebuilding your credit. Another tip is to ensure you keep your credit card balance to under 35%, this simple tip will significantly improve your credit rating when applying for a mortgage.

Walden, Calgary, SE, New Town Homes, Axis in Walden

Pay Off Debt.

One of the tools lenders use to determine how much mortgage you can afford is your debts. Lenders use calculation called Total Debt Service (TDS) ratio to determine how much you can handle. Your total debt load should not be more than 42% of your gross income. A higher TDS means that you are at risk of having more debt than you can reasonably afford.

If during the pandemic you were unemployed, you may have been in a situation where you had to take on debt to make ends meet. Another scenario, you may have had to suspend your debt payments and therefore behind on your plan to pay off debt prior to applying for a mortgage. If so, those debts may be the reason you have a higher TDS ratio, limiting the amount you can borrow for your mortgage.

To fix this, focus your efforts on paying off any debt you have accumulated during the pandemic. Once that’s done, you can apply for a mortgage pre-approval knowing that your TDS ratio will not hold back your pre-approval amount.

Ensuring Reliable Employment.

Before the pandemic, reliable employment was a necessity before applying for a mortgage. This requirement is still the same today. Even if you have a substantial down payment, great credit, and no debt, without a reliable full-time job, you still won’t get approved for a mortgage.

Unfortunately, reliable employment is not always a guarantee, especially during the pandemic. If during the last year you have struggled to find a job, you will need to put your goals of owning a house on hold. On the topic of employment, once you have secured a position, you will need to stick with it for at least six months before applying for a mortgage pre-approval. Obtaining employment is a mandatory requirement prior to applying for a mortgage.

DO NOT Apply for New Credit!

When you apply for a mortgage, your lender will pull your credit score and report; they are looking for indicators that you are a good borrower, and one of the biggest ones is how you manage your existing credit. If you have applied for any new types of credit recently, this may signal that you are in financial trouble, which is a red flag to lenders.

Instead, avoid applying for new credit for at least six months prior to submitting your mortgage application. Holding off on new credit might not be possible during the pandemic since funds might be short, and you might need extra credit to get through periods of unemployment or underemployment. If this is the case, consider your need for credit a clear indicator that you should put your mortgage application on hold for the time being.

Analyze Your Budget.

One tough lesson that the pandemic taught us, is that there are many aspects of daily life that we take for granted. Things like employment, shelter, or the ability to socialize with friends and family whenever we like. When it comes to financing your new home, it is essential to take a thorough look at your budget and scrutinize how it will hold up when life gets interrupted for the worse. What will happen if you or your spouse (or both) lose your job? Will you still be able to make your mortgage payments? And if so, for how long?

When planning to buy a home during and post COVID-19, you should examine your potential new home budget to make sure you can make ends meet even when something like a pandemic comes along. You may want to lower your maximum purchase price, pay off some or all debt first, save a bigger down payment, or establish/add to your emergency fund. A good rule of thumb is to hope for the best but plan for the worst.

The Last Word.

The process of buying a home in 2021 remains the same from pre-pandemic times. While more of the paperwork can be completed online, and the opportunity to view as many homes is limited, the process is essentially the same as before. What has changed is how you manage your finances and adapting to the new norms of a global pandemic that can dramatically affect the economy, both locally and internationally. If you have been affected by the pandemic, you may need extra resources and time to recover, and that’s ok. If you feel ready to buy your new home, take another look at your financial profile and enlist the help of a mortgage broker to identify areas for improvement or repair. A mortgage specialist will help you get the right mortgage and terms that set you up for success in the long term and account for emergencies like losing your employment or being unable to work temporarily.

Need help from a trusted mortgage broker? We can help with that. Visit our show homes at 8 Walden Lane SE for more details.

Expect More With Rockford. Get Everything You Deserve With Axis in Walden

Tuesday, 2 March 2021

Quality Townhomes and an Amazing Location – Axis really does have everything!

Your search is over. Rockford Developments builds the highest quality new townhomes in Calgary. Beautiful, open concept interiors and practical layouts for maximum living space. Located in the south east community of Walden.

We’re building townhomes and communities in the south east community of Walden – a new, dynamic area located just 16 miles from downtown.

Axis is the most convenient, tailor-built town home project in the community of Walden. Nestled next to over 2 acres of walking paths and natural scenery and just minutes away from amenities and major roadways. Rockford homes have been designed to provide their residents with quality, comfort and convenience.

Your Home, Exactly the Way You Want It

With spacious 2 and 3 bedroom floor plans and backing onto 2 adjacent green spaces, Axis has everything for the modern new home owner. Our townhomes offer more square footage with larger kitchens and feature higher end standards like quartz counters, luxury vinyl plank flooring, 9’ ceilings and more!

A Name You Can Trust

New homeowners have praised the quality craftsmanship of Rockford built townhomes for over 20 years. With our latest development Axis in Walden, we are expanding our building vision to include these beautiful, uniquely designed townhomes featuring modern architecture on the outside, and high-end features on the inside. Walden is the perfect location for these new townhomes - an established community that has many parks and pathways, featuring natural ponds and green spaces that back onto our development.

With Rockford, You’re in Good Hands

Your convenience is paramount to us. Axis has on-site management for everything on the exterior of your home, walking paths right outside your door. Our development is conveniently located close to schools, churches, shopping and more! Design your home the way you want and move in - starting from $299,000. On top of that, every home we build comes with an Alberta New Home Warrranty for 10 Years!

Come on by and see the Rockford difference. You really can have it all with Axis in Walden.

Our showhomes are located at 8 Walden Lane S.E Our hours of operation are from Monday - Thursday 2-7pm,

closed Friday and open Saturday, Sunday and holidays from noon-5pm.