Most Expensive Homes For Sale In Canada, October 2015
Crystal Wong, senior regional manager for financial planning at TD Wealth, says when saving for a first home, she would encourage people to use a regular savings account or a tax-free savings account instead. With a TFSA, people don't pay any tax on the investment gains in the account and they don't need to repay the money they withdraw. However, Wong said if people find themselves short, they can consider going into their RRSPs. "The pro to that is that you've got the money that you've saved, so it is your funds," she said. "The con would be that you kind of give up some of the potential growth that you have in the RRSP that actually funds your retirement." Gares says there are times when it does make sense to use retirement savings to help buy a home. He pointed to a situation where taking money from an RRSP might allow people to make a 20 per cent down payment and avoid the need for high-ratio mortgage insurance. "Avoiding those types of transactional costs, that is certainly a scenario where I think it is justifiable to use the homebuyers' plan," Gares said. However, he warned that if a person's only real asset is in real estate and they don't have any other savings or investments, they are not truly diversified. "That's one thing I would caution against," he said. "If you're really utilizing all of your liquid assets for the purpose of making that purchase, then you might need to consider if that's really an affordable expense for you."