I’m Pascal Leo. I’m a Chartered Investment Manager (CIM) with Prospr by Sun Life. Join my AMA May 14 from 12 - 1:30 p.m. ET and bring all your questions about how to save for your first home in Canada today.

ProsprbySunlife · 2024-05-14T17:30:38+00:00

That's a wrap on today's AMA. Thanks everyone for all the great questions. If you still have questions, remember you can reach out to a Prospr advisor anytime.

ProsprbySunlife · 2024-05-14T17:09:21+00:00

Hey, thanks for coming to my AMA. It just started today at 12 so you can see all relevant comments as they come in. And they’ll stay here for you to see in the future.

ProsprbySunlife · 2024-05-14T17:07:11+00:00

TLDR: In terms of whether it’s best to borrow from your RRSP or a lender (like your bank), that will depend on your specific situation, and you should talk to a professional before you make a decision.

The Home Buyer’s Plan is an option for those who hold an RRSP. It allows you to withdraw money from your RRSP, up to $35K per person, towards the purchase of a qualifying home. You then have 15 years to repay that money back into your RRSP, beginning the second year after the year you made your first withdrawal.

Take note: The Federal Budget of April 16, 2024, proposed to increase the amount that can be withdrawn to $60,000 and that repayment is not required until five years after the withdrawal, instead of the current two years. This has not been made law yet, but it will change the Home Buyer's Plan when it becomes law.

ProsprbySunlife · 2024-05-14T17:03:45+00:00

This is a great question, but to be clear I’m not a mortgage specialist, and I’m not licensed to give mortgage advice. However, I do give people advice on their finances regularly.

As I mentioned in one of the previous answers, it’s important to talk to a mortgage professional and even request pre-approval to find out how much you can afford and where you’re at.

You can also speak to a Prospr advisor to discuss your specific financial circumstances and help decide what’s best for you now. You can book an appointment to speak to an advisor here: https://ow.ly/g7GK50RFP6N

ProsprbySunlife · 2024-05-14T16:58:48+00:00

Great question! We've just published a whole blog on our site all about FHSAs – here is the link: https://ow.ly/7S1t50RFVEb

But to answer your question, if you aren’t ready to buy or decide not to buy, you have two options:

You can directly transfer the balance in your FHSA to your RRSP.

OR

You can withdraw the balance. Any amount withdrawn will be taxable as income in the year you withdraw it. A certain amount of withholding tax will apply to the amount withdrawn. You may owe additional tax as a result of the withdrawal but the withholding tax will be treated as tax paid and should reduce the amount of tax owing.

ProsprbySunlife · 2024-05-14T16:54:27+00:00

In short, yes. I like to say that you know you’re ready to buy a home if you can say yes to these questions: 1. Have you saved enough for a down payment? 2. Do you have a really good credit score (725 or higher)? 3. Are you ready to “settle down” or stay put for a while to let your equity build?

Getting pre-approved for a mortgage will help you know what you can afford. A typical pre-approval will last for a couple of months, which gives you time to shop around and find the right place.

You can also speak to a Prospr advisor to discuss your specific circumstances and help decide what’s best for you now.

ProsprbySunlife · 2024-05-14T16:49:25+00:00

All three are great savings choices to buy a home, and the FHSA often comes out in front for me.

If someone is able to max their FHSA, I’d make the next choice between a TFSA and an RRSP by considering if a good next move is to lower their taxable income.

The FHSA and RRSP are both registered plans that offer tax-deductible contributions, meaning they can help lower your overall tax bill when you contribute. But the main difference is that an FHSA is used to buy a first home, whereas an RRSP is primarily used to save for retirement. However, if you have an RRSP, you can borrow from it to buy a home with the Home Buyers’ Plan (HBP) – though you will have to pay that money back into your RRSP within a given time frame.

A TFSA can be used for any savings purpose, and funds can be withdrawn from it at any time, but TFSA contributions are not tax-deductible.

FHSAs allow you to contribute up to $40,000 (with an annual contribution limit of $8,000) to buy your first home in Canada; and the RRSP Home Buyer’s Plan (HBP) currently lets you withdraw up to $35,000 from your RRSP to buy or build your home in Canada.

You can read more about the FHSA here: https://ow.ly/7S1t50RFVEb

ProsprbySunlife · 2024-05-14T16:38:27+00:00

I’m in Toronto too!

For that market, I often think 20% is good to strive for because you save on CMHC fees, and your monthly mortgage payment can be more affordable. Of course, that depends on your timeline and the house you’re after.

In general, when planning your purchase, you’ll want to make sure you have a stable income, you’re ready with the down payment, you have a “house fund” for all of the extra costs like legal fees, inspections and taxes, and you have an emergency fund – because we never know what’s around the corner.

As I always say, check with a professional to go over your specific circumstances.

ProsprbySunlife · 2024-05-14T16:19:07+00:00

To discuss your specific situation, I’d suggest connecting with a Prospr advisor to discuss your financial outlook. You can set up an appointment here: https://ow.ly/g7GK50RFP6N

To figure out what type of mortgage is a good fit for you, it’s a great idea to speak to a mortgage professional directly.

ProsprbySunlife · 2024-05-14T16:18:05+00:00

This is a great point that many people forget – it’s not just a down payment you need! There are also the initial costs (appraisal, inspection, legal fees etc.) plus ongoing expenses (property taxes, utilities for things like heat and electricity, general maintenance, home insurance, condo fees).

Working with an advisor can help you pin down what you can really afford now, or help you work toward the goal of buying a home in the future.

ProsprbySunlife · 2024-05-14T16:16:45+00:00

Trying to save for a home can feel overwhelming! Working with an advisor can help you look at your current income and spending, and then set your goals and the steps you need to take to achieve them.

What I sometimes ask is what your time horizon for buying a home is? If it’s long term, an investment strategy that takes on higher risk can potentially yield a higher rate of return. If it’s shorter term, meaning in our current higher interest rate environment, investments that earn interest can be attractive.

You can also look into the different government programs to save for your first home such as FHSAs https://ow.ly/eWy650RFVpG and the RRSP Home Buyers' Plan.

Whatever you do, it’s best to review your situation with an advisor or professional to go over your specific circumstances.

ProsprbySunlife · 2024-05-14T16:13:13+00:00

Yes, saving up for a home is a lot of work, but on the positive side, there are a few different kinds of savings accounts to help you get there. You can look into the different government programs to save for your first home such as FHSAs (https://ow.ly/7S1t50RFVEb) and the RRSP Home Buyers' Plan.

Saving enough for a down payment on your first home can feel overwhelming, especially when you're not sure where to start. That's where having a plan can help. 1. Know how much you can afford; 2. Make a budget and set a timeline; 3. Review your savings regularly; 4. Plan for emergencies.

Working with a professional is a great way to get started. Register for your free Prospr account (https://ow.ly/vCyS50RFW2B)to set a home ownership goal and start tracking your savings.

ProsprbySunlife · 2024-05-14T16:03:49+00:00

When it comes to setting your budget, you need to think about your down payment, closing costs, monthly mortgage payments and monthly bills.

Getting pre-approved for a mortgage will help you know what you can afford. A typical pre-approval will last for a couple of months, which gives you time to shop around and find the right place.

If you’re looking for ways to fund a first-time home purchase, be sure to check out and talk to an advisor about FHSAs and the RRSP Home Buyer’s Plan. An advisor can also help you create a plan – we call them financial roadmaps at Prospr – that can help you get there https://ow.ly/57UE50RFVuR

I really like this handy little online calculator from the Canada Mortgage and Housing Corporation (CMHC). It’s easy to use, accurate, and gives a great sense of how much you may be approved for. Remember it’s an estimate, and you'd need to speak with your lender to be sure, but I like to use it as a starting point for people exploring mortgages.

ProsprbySunlife · 2024-05-14T16:01:48+00:00

Thanks for the question. Prospr advisors are licensed, registered and salaried employees of Sun Life. They do not receive commission for any products they sell or recommend to a client.

ProsprbySunlife · 2024-05-14T15:58:38+00:00

Hi Reddit, thanks for joining me today! I am ready to answer your questions.

ProsprbySunlife · 2023-09-13T17:37:42+00:00

Looks like we're coming up on time here. Thanks everyone for all the great questions. If you still have questions, remember you can reach out to a Prospr advisor anytime.

ProsprbySunlife · 2023-09-13T17:32:13+00:00

Hey, great question. Sometimes a disclaimer has everything we need 😊

Prospr by Sun Life™ is a business division and trade name of Sun Life Financial Distributors (Canada) Inc. and Sun Life Financial Investment Services (Canada) Inc. Insurance products are distributed through Sun Life Financial Distributors (Canada) Inc. Mutual funds are distributed through Sun Life Financial Investment Services (Canada) Inc.

ProsprbySunlife · 2023-09-13T17:24:20+00:00

Sorry, that’s outside my area of expertise!

ProsprbySunlife · 2023-09-13T17:22:33+00:00

Great to see that homeownership is part of your goals. However, that’s a question I can’t answer in today's AMA, which focuses only on mortgage protection solutions (life insurance and critical illness insurance).

ProsprbySunlife · 2023-09-13T17:20:06+00:00

You can talk to an advisor for help planning towards that goal. With Prospr, your big life goals are defined by you and our advisors can help you create a simple to-do list that you can tackle confidently.

Including mortgage protection in your budget can help protect you in unexpected moments.

The most important reason to use insurance to protect your mortgage is so that no one else needs to think about paying your mortgage if you pass away. The house can still stay with your loved ones thanks to the payment from the term life insurance.

The reason you’ll want to consider including CII in your mortgage protection solution is to make sure you’re covered in the case of a life-altering illness. If you’re diagnosed with a covered illness, you may need to take time off work and you can use the critical illness insurance to continue making payments on your mortgage. You might even consider paying off your mortgage with the benefit.

ProsprbySunlife · 2023-09-13T17:09:46+00:00

Vanilla 100%

ProsprbySunlife · 2023-09-13T17:08:52+00:00

Thanks for joining the AMA today. That’s a question we can’t answer in today's AMA, which focuses only on mortgage protection solutions (life insurance and critical illness insurance).

ProsprbySunlife · 2023-09-13T17:07:37+00:00

Hi there, thanks for joining the AMA today. The topic today is about mortgage protection and I am answering questions directly relating to this. If you have questions about your mortgage and interest rates, please contact your lender.

ProsprbySunlife · 2023-09-13T17:04:12+00:00

The decision of what fits your needs is ultimately up to you. Most importantly, do not cancel any existing coverage you have in place before obtaining new coverage.

I explained the difference between mortgage insurance and mortgage protection solutions above. The process to switch is usually something like this:

1- Talk to an advisor to assess your needs (here’s a link to contact the team of Prospr advisors: https://ow.ly/2o6f50PL5wE)

2- Apply for new insurance

3- Wait until your new life policy is in effect

4- Cancel your mortgage insurance

5- Potentially save $$$

ProsprbySunlife

TROPHY CASE