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Originally Posted by rubecube
Sure that's one example, but we both know this has the potential to be abused pretty badly. Parents gift/lend their kids the $20k, and then pocket the amount received from the government.
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I don't think that's how this works at all.
Quote:
Originally Posted by rubecube
Again, maybe some of the investment crowd can chime in here because it's not my forte, but wouldn't this be better as a top-up program? Say if you're at $18,000 and you need the extra $2k to get to 5% rather than a straight up match? If I'm sitting at $20k and get pre-approved, what's to stop me from taking the government's $20k and spending it on hookers and blow?
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Unless I'm missing something in the articles, I don't think you understand how the program works. Let's assume you have saved up $20,000 and qualify for another $20,000 from the government. The government isn't writing you a cheque that you can cash at the bank. You go find a home and write an accepted offer. At closing time you go to the lawyer's office. You give the lawyer your $20,000 bank draft. The government will provide an additional $20,000 towards the purchase price and register a second mortgage. The balance will be the remaining amount, which will be the first mortgage.
After five years, you have to start paying back the $20,000 government loan over a 20 year period. You have the right to pay back this loan at any point. While not a perfect example, it's very similar to taking out $20,000 from your RRSPs to use the Home Buyers Plan. When you take advantage of the HBP, your bank doesn't give you the $20,000. The money is moved at closing, and you have to pay yourself back the money over the next 15 years. If you don't, you have to take that amount into your income on your tax return.