RRSP's to HBP

[GrrlGoalie33]

If you have the required money for the downpayment, I would suggest not taking the money out of your RRSP. You will be required to pay that money back (adding another bill), and you lose the interest earning potential.

[Sylvanfan]

Yeah, if you can swing the downpayment without going into your RRSP thats the way to go. If you want to get the house paid off faster, get a mortgage that will let you pay weekly and use the money that you would have to use to repay your RRSP to tack onto your mortgage payment. You'll easily pay off a standard 25 year mortgage within 15 years. Whereas putting an extra $10,000 down now won't make much difference on your payment.

[MoneyGuy]

I'm a certified financial planner. Moneyguy, get it? Just about all the info that's been presented here is accurate. Bottom line: Try not to use the FTHBP unless absolutely necessary. The plan can be very useful in the right situation, but it isn't necessarily right for everyone. If you have specific questions, PM me.

[mykalberta]

As someone who recently bought a house and used 20K in the HBP to purchase.

Let me give out some words of caution. If you are thinking of using it as your downpayment then make sure yourself or someone else who is cosigning your mortgage has the 5% + a bit in a recorded account.

I used 10K for it as the up front cost and then expected the other 10k to cover the rest of the 5%, but my bank wanted an extra 10 k to appear to cover "legal costs".

For the last 3 years I put 6750 into HBP and it ended up only saving me some income tax money.

MYK

[Mr.Coffee]

Originally Posted by mykalberta

As someone who recently bought a house and used 20K in the HBP to purchase.

Let me give out some words of caution. If you are thinking of using it as your downpayment then make sure yourself or someone else who is cosigning your mortgage has the 5% + a bit in a recorded account.

I used 10K for it as the up front cost and then expected the other 10k to cover the rest of the 5%, but my bank wanted an extra 10 k to appear to cover "legal costs".

For the last 3 years I put 6750 into HBP and it ended up only saving me some income tax money.

MYK

I have some more advice. Pretty much unrelated. Never cosign. Ever.

Just don't do it. Maybe if its your kid or wife or something. But other then that never.

[V]

Why not? I know that my Father-in-law co-signed for my brother-in-law's house because the kid was absolutely broke, but really needed a house to keep his wife and kid in. House prices in the lower mainland (Langley) are not great for young families (not here any more either, of course).

From everything I've heard it's worked out alright with no problems. Is there a specific reason? I see your last sentence says it's alright if it's your kid, so maybe this has something to do with trust?

[V]

Originally Posted by return to the red

well I have the money for the downpayment I was just concidering putting more money down and lowering the amount I am mortgaging. Personally I can afford the mortgage but I like having that extra money and push to pay stuff off quicker

Thanks for all the advice and personal input

Don't touch your RRSPs if you don't need them to get into the market. That extra 20 grand downpayment will not save you nearly enough in interest on the houe to make up for losing those gains as well as tax sheltering opportunities. The only time it's a good idea to use HBP is if you can't get into the market with your own savings. Or if interest rates are around 18%.

[ken0042]

Originally Posted by Mr.Coffee

I have some more advice. Pretty much unrelated. Never cosign. Ever.

Just don't do it. Maybe if its your kid or wife or something. But other then that never.

Originally Posted by Dominicwasalreadytaken

Why not? I know that my Father-in-law co-signed for my brother-in-law's house because the kid was absolutely broke

So, that would be his kid that he co-signed for, right?

[V]

Doesn't change the question. And I addressed that at the end of my post.

[ken0042]

Sorry, I must have missed that.

I know I have rarely seen anything good come from a co-signing. Granted most of the times I have seen it was when I worked retail and with retail credit cards.

But with a house there are other options. Myself I didn't qualify when I bought my house so I assumed a mortgage.

[Mr.Coffee]

Yes trust has everything to do with it. By cosigning you are retaining ALL responsibility in the event the loanee hops on a plane to a remote destination with all the money and a few broads with no intention to ever return.

Or even in the event the loanee doesn't pay it back.

I've heard a LOT of stories about people who decided to be nice a cosign a loan for a friend. Friend cant make payments, or just simply doesn't. And boom. Bank goes to YOU and only YOU and legally you are responsible. It can be a financially disastrous situation.

[V]

I've also heard that allowing someone to assume your mortgage puts you at an equal risky position. If the people that have assumed your mortgage can't make the payments than you have to take responsibility for them. Any truth to this?

I'm thinking of putting one of my rentals up for sale, and I'd like to have someone assume the mortgage so that I don't have to pay the 3 months of interest penalty, but there's no way I'll do it if that mortgage gets tied to me if something goes sideways.

[White Doors]

Originally Posted by Dominicwasalreadytaken

I've also heard that allowing someone to assume your mortgage puts you at an equal risky position. If the people that have assumed your mortgage can't make the payments than you have to take responsibility for them. Any truth to this?

I'm thinking of putting one of my rentals up for sale, and I'd like to have someone assume the mortgage so that I don't have to pay the 3 months of interest penalty, but there's no way I'll do it if that mortgage gets tied to me if something goes sideways.

Yes, in Alberta only you are liable. Why you would want someone to assume the mortgage with the appreciation levels here though, I have no idea.

[V]

Opens the house to more buyers, quite simply. There are a lot of people out there that don't qualify for a 250K mortgage, but they can afford to assume a mortgage, so it's their only way to buy a place.

I won't do it if I'm still liable for the mortgage after they've bought the house, though.

[ken0042]

When I assumed my place, the advantage that the seller received was that they didn't have to pay a a penalty to the bank for ending the mortgage early. IIRC that saved them a couple of thousand dollars.

The other advantage to the seller is that if I default, and they end up having to make one payment, then they re-gain entire possesion of the house. Which means me as the buyer can kiss my deposit goodbye. With my place it was over $20K. So basically if he was exposed to the risk, he would gain $20,000 for his trouble.

This was all helpful for them as they were a couple going through a divorce, so it wasn't like they were going to be going out and buying another place right away.

And as mentioned it does open you up to more buyers. Especially investment types of people; because if I want to buy your house and use it as a revenue property, I can have as many mortgages as I want because I didn't have to qualify. A guy I used to work with did that all the time. I say used to work with because he retired a few months ago; at age 40.

[GrrlGoalie33]

I think the regulations around assuming a mortgage changed in the summer of '04. My understanding is even if you are assuming a mortgage, you now have to qualify just as you would if you were applying for a morgage. I could be wrong on this.

The same applies for signing your share of a property over. So if you cosign with your kid, and want to "gift" your share of the house to them, the kid now has to "qualify" for their portion of the morgage, as well as your portion before you can gift your share of the house to them. I know this to be true, because my parents are stuck in a mortgage with me because I can't qualify to carry the whole mortgage.

[return to the red]

Originally Posted by Frankster

I think the regulations around assuming a mortgage changed in the summer of '04. My understanding is even if you are assuming a mortgage, you now have to qualify just as you would if you were applying for a morgage. I could be wrong on this.

The same applies for signing your share of a property over. So if you cosign with your kid, and want to "gift" your share of the house to them, the kid now has to "qualify" for their portion of the morgage, as well as your portion before you can gift your share of the house to them. I know this to be true, because my parents are stuck in a mortgage with me because I can't qualify to carry the whole mortgage.

not sure if this is the case as my property was "sold" to me for a dollar and I had to do nothing in terms of being able to carry the mortgage, mind you I was always paying the mortgage in the first place, the property was just in my parents name