Real Estate

Deposit on a Property If Down payment in RRSP

  • Last Updated:
  • Sep 16th, 2018 10:44 pm
Newbie
Sep 13, 2018
7 posts

Deposit on a Property If Down payment in RRSP

HI everyone,
We are first-time home buyers, and we saved for down payment on our RRSPs. Now, that we are ready to start searching, we figured that there's a problem - When making an offer, we are supposed to provide a deposit, that will be used towards the down payment, and usually it's expected to be a good chunk of cash. We only have about 7K-10K in our bank account for closing costs, everything else is in RRSP, and we can't withdraw this money unless we already have an agreement to purchase. Has anyone been in a situation like this? What did you do?
P.S. we are buying in the GTA, purchase price would be about 500K, which means a really good chunk of money is expected as a deposit.
10 replies
Member
Feb 20, 2017
337 posts
106 upvotes
Barrie, ON
Zombly wrote: I bought my first house for 400K and put down 1K, it only really matters in a bidding war season. In this slower buyers market I don't see why you would need to put down a chunk of money for a 500K home.
Edit// We are looking for a house now and will only probably put down 3-5K for a home valued min 550K, because most of our equity for down payment is in our current home.
Deal Guru
User avatar
Mar 23, 2008
13006 posts
10009 upvotes
Edmonton
Zombly wrote: Edit// We are looking for a house now and will only probably put down 3-5K for a home valued min 550K, because most of our equity for down payment is in our current home.
From what I recall, your deposit happens first, and your closing costs/down payment happen just before closing. So use your cash for the deposit, then you can raid your RRSP for the closing costs and DP.

C
Member
Feb 20, 2017
337 posts
106 upvotes
Barrie, ON
CNeufeld wrote: From what I recall, your deposit happens first, and your closing costs/down payment happen just before closing. So use your cash for the deposit, then you can raid your RRSP for the closing costs and DP.

C
This is correct sorry if I was unclear.

You put a deposit down when making an offer, once offer is accepted you get down to all the fun parts. We've made several offers on homes without a deposit at all not sure if it's changed that once the offer is accepted then you put down the deposit? You should be able to ask your realtor what the min is and some sellers might have a different min but if they are actually willing to sell they don't care as I would say 500K for GTA unless condo is pretty cheap. We're not in the GTA and we can't even find anything for 500K really anymore.
Deal Fanatic
User avatar
Jan 16, 2011
7205 posts
9238 upvotes
The NORTH
CNeufeld wrote: From what I recall, your deposit happens first, and your closing costs/down payment happen just before closing. So use your cash for the deposit, then you can raid your RRSP for the closing costs and DP.

C
this is what my wife and i did. although our deposit was $2k and down payment was $30k ($32k with deposit) on $320k house.
Deal Addict
Feb 5, 2009
2808 posts
940 upvotes
Newmarket
Zombly wrote: This is correct sorry if I was unclear.

You put a deposit down when making an offer, once offer is accepted you get down to all the fun parts. We've made several offers on homes without a deposit at all not sure if it's changed that once the offer is accepted then you put down the deposit? You should be able to ask your realtor what the min is and some sellers might have a different min but if they are actually willing to sell they don't care as I would say 500K for GTA unless condo is pretty cheap. We're not in the GTA and we can't even find anything for 500K really anymore.

Of course the sellers care, offer without a deposit is pretty much meaningless.

In the sellers market the deposits had to be pretty significant, now in the balanced market the bidding wars are not very common so the deposits can be much smaller, but an offer with zero deposit is pretty much worthless. That definitely is the case for GTA and southern Ontario, could be that elsewhere is different.
Deal Fanatic
User avatar
Jan 16, 2011
7205 posts
9238 upvotes
The NORTH
Homerhomer wrote: Of course the sellers care, offer without a deposit is pretty much meaningless.

In the sellers market the deposits had to be pretty significant, now in the balanced market the bidding wars are not very common so the deposits can be much smaller, but an offer with zero deposit is pretty much worthless. That definitely is the case for GTA and southern Ontario, could be that elsewhere is different.
Absolutely right! When my wife and I sold our last house we had multiple offers, the top 2 were basically even but one came with a $50,000 deposit ($500k house). We went with that offer because it showed how serious the buyers were.
Deal Guru
User avatar
Feb 2, 2014
11231 posts
3350 upvotes
Toronto
Yuliana wrote: HI everyone,
We are first-time home buyers, and we saved for down payment on our RRSPs. Now, that we are ready to start searching, we figured that there's a problem - When making an offer, we are supposed to provide a deposit, that will be used towards the down payment, and usually it's expected to be a good chunk of cash. We only have about 7K-10K in our bank account for closing costs, everything else is in RRSP, and we can't withdraw this money unless we already have an agreement to purchase. Has anyone been in a situation like this? What did you do?
P.S. we are buying in the GTA, purchase price would be about 500K, which means a really good chunk of money is expected as a deposit.
So put the $10k for the deposit. I'm sure there are sellers that will accept that.
Kevin Somnauth, CFA
Principal Broker/Owner - First Toronto Mortgage - MA (Ontario #13176, BC #X301007)
Real Estate Salesperson - Century 21 Innovative
Deal Addict
Jun 7, 2017
1043 posts
836 upvotes
BC
CdnRealEstateGuy wrote: So put the $10k for the deposit. I'm sure there are sellers that will accept that.
That’s 5% on $200k. GTA, really?
Deal Guru
User avatar
Feb 2, 2014
11231 posts
3350 upvotes
Toronto
Furcorn wrote: That’s 5% on $200k. GTA, really?
Yes, I’ve done $10k deposits before. A lot of first time homebuyers are in the same position as OP. It obviously depends on the seller and the market, but it’s definitely doable on a $500k property.
Kevin Somnauth, CFA
Principal Broker/Owner - First Toronto Mortgage - MA (Ontario #13176, BC #X301007)
Real Estate Salesperson - Century 21 Innovative
Member
Apr 6, 2009
329 posts
68 upvotes
Yuliana wrote: HI everyone,
We are first-time home buyers, and we saved for down payment on our RRSPs. Now, that we are ready to start searching, we figured that there's a problem - When making an offer, we are supposed to provide a deposit, that will be used towards the down payment, and usually it's expected to be a good chunk of cash. We only have about 7K-10K in our bank account for closing costs, everything else is in RRSP, and we can't withdraw this money unless we already have an agreement to purchase. Has anyone been in a situation like this? What did you do?
P.S. we are buying in the GTA, purchase price would be about 500K, which means a really good chunk of money is expected as a deposit.
On your offer write $10k deposit to be submitted within 24 hrs after acceptance (as per usual). On your offer's schedule A ask your agent to include "supplementary deposit clause" that will say you will submit additional deposit (say for $10k) within 4 business days after acceptance. If your offer gets accepted, bring the agreement of purchase to the bank and withdraw money for supplementary deposit from your rrsp. Most can release within a few days. As for money for your closing costs, check with your lender if you can take this out from your rrsp as well under the first-time home buyers plan.

Top