Real Estate

Question about Home Buyer's Plan and House Closing Prior to 90 Days

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Apr 16, 2006
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Question about Home Buyer's Plan and House Closing Prior to 90 Days

Hello all,

I'm looking for some help in terms of figuring out whether I can do this, and if so, how.

The wife and I are looking to buy a home, as soon as within a week from today, or as late as a year from now. I've got about $30,000, $5,000 of which is in a TD RRSP. The rest is in a TFSA Savings Account and Regular Savings Account.

It is my intention to max out what I can use from the home buyer's plan, being $25,000. I want to deposit $20,000 in an RRSP savings account, and then 91 days later (because it needs to be in there for 90 days), take out that money tax free and put it towards my home, along with the $5,000 in my TD RRSP account. HOWEVER, the issue lies with the fact that whatever house we get will likely have a closing date LESS THAN 90 days from the date we sign the contract. The reason I haven't yet deposited the cash into the RRSP savings account is because I don't want to lock up the funds unless and until we have found the right home for us. Also, ever dollar I earn in my TFSA savings account is another dollar I can contribute to my RRSP savings account and is another dollar that my taxable income will be reduced by (I'm in the 3rd tax bracket).

Is it possible for me to buy a house tomorrow, immediately move $20,000 into my RRSP savings account (this will be at a bank other than where we get our mortgage from), use the $5,000 from my TD RRSP account and borrow $20,000 from a relative and put that $25,000 towards the down payment on the closing date in two months, and then after I move in and after the money has been in my RRSP savings account for 90 days (so one month later), fill out the home buyer's plan forms for those funds and get access to the money tax free and re-pay the $20,000 I previously borrowed from the relative?

Basically, I want to funnel this through the RRSP account so I can get a $7,200 tax refund in April next year, but I also want to be able to get access to that money for the house and not have it locked up if I can help it.

Anyone done something like this before? Is it possible?

The bank rep where we're getting our mortgage from said this is "not possible", but my impression of them is that they appear to know virtually nothing about their job, TFSA's, RRSP's, or personal finance in general (it is, frankly, extremely concerning). Furthermore, the bank where we're getting our mortgage from could not know whether the $20,000 I'm putting towards the house would be from a loan or gift from a relative, or from an RRSP account at another financial institution. The only flaw in my plan, at least as far as I can tell, is whether the CRA would allow me to withdraw the money from the RRSP without penalty for the home buyer's plan shortly after I move into the house. If so, then I think this plan is doable. If not, then I think I'm hooped. That's why I'm asking for your help.

Thanks in advance!
8 replies
Sr. Member
Aug 16, 2010
560 posts
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Thornhill
Octavius wrote: Is it possible for me to buy a house tomorrow, immediately move $20,000 into my RRSP savings account (this will be at a bank other than where we get our mortgage from), use the $5,000 from my TD RRSP account and borrow $20,000 from a relative and put that $25,000 towards the down payment on the closing date in two months, and then after I move in and after the money has been in my RRSP savings account for 90 days (so one month later), fill out the home buyer's plan forms for those funds and get access to the money tax free and re-pay the $20,000 I previously borrowed from the relative?
The answer is yes, as long as you meet all the HBP requirements. The main requirement that you would have to be aware of is that you must withdraw the funds for HBP by 30 days after the closing date. In your example, you would be cutting it close.
Deal Addict
Jul 15, 2009
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I did something like this. Contributed Jan 2, closing date was mid-March, withdrew under HBP early April. Double-check the rules, but I recall back then, the rule was that the withdrawal had to be within 30 days after closing. I set things up beforehand with the bank so that the forms were all filled out correctly ahead of time, and then just went in to sign them and do the withdrawal in early April. Make sure you find an RRSP advisor/salesperson at the bank who understands what you're doing and why the timing is important. The one I dealt with for this was great, but I've also experienced totally incompetent RRSP advisors before. In my case, the mortgage salesperson and the RRSP salesperson were two different people.
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Nov 24, 2013
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Kingston, ON
bubak wrote: I did something like this. Contributed Jan 2, closing date was mid-March, withdrew under HBP early April. Double-check the rules, but I recall back then, the rule was that the withdrawal had to be within 30 days after closing. I set things up beforehand with the bank so that the forms were all filled out correctly ahead of time, and then just went in to sign them and do the withdrawal in early April. Make sure you find an RRSP advisor/salesperson at the bank who understands what you're doing and why the timing is important. The one I dealt with for this was great, but I've also experienced totally incompetent RRSP advisors before. In my case, the mortgage salesperson and the RRSP salesperson were two different people.
Just note if you do that (get your HBP within 1-30 days after close), you do still need funds to close with. If locking the $20,000 in for 90 days will prevent closing, it may not be a good idea. Not sure if there's a bridge loan product that could be used for that or not.
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Apr 16, 2006
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I was pretty sure the representative was wrong; thanks everyone for confirming my suspicions.

I've asked whether some sort of bridge-financing could be used while waiting for the 90 day time period to pass, but was advised there wasn't unless I was moving from one home to another home (which I am not). Then again, this was also by the same person that said what I want to do here is not possible when it clearly is (and I found a HBP information site on the CRA website that confirms I can do it, so long as the timing matches up exactly).

I'll use the emergency cash I wasn't going to use towards the downpayment and put that into my RRSP. Since there's technically no requirement that the HBP funds from the RRSP go directly towards the home (downpayment, etc), I can put it in, wait the 90 days, pull it out within 30 days of me moving in, and move it back to where it is right now, thereby once again granting me full access to my emergency funds along with a healthy ~$7,200 tax refund come April.

Now I just need to make sure I have the timing set out just right to make this work. Otherwise, I'll just not contribute the funds to my RRSP and skip the HBP portion of my plan.

Thanks everyone for all your help!
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Nov 22, 2015
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Octavius wrote:
The bank rep where we're getting our mortgage from said this is "not possible", but my impression of them is that they appear to know virtually nothing about their job, TFSA's, RRSP's, or personal finance in general (it is, frankly, extremely concerning). Furthermore, the bank where we're getting our mortgage from could not know whether the $20,000 I'm putting towards the house would be from a loan or gift from a relative, or from an RRSP account at another financial institution. The only flaw in my plan, at least as far as I can tell, is whether the CRA would allow me to withdraw the money from the RRSP without penalty for the home buyer's plan shortly after I move into the house. If so, then I think this plan is doable. If not, then I think I'm hooped. That's why I'm asking for your help.

Thanks in advance!
Yes they would. Proof of downpayment is something you will have to provide to the bank prior to closing.

You'll need to provide bank statements that demonstrate a gradual accumulation of funds for your downpayment OR a gift letter signed by all parties indicating that the money is given freely as a gift. The gift letter option is usually only available if the funds are coming from a direct family member and not extended family.

I'm not sure why you're surprised that the bank rep isn't a tax expert and financial guru.... it's an entry-level sales position - their only job is to identify sales opportunities and sell financial products. In fact, many banks have procedures in place to prohibit their employees from discussing taxation or legal issues, and to direct any concerns to their lawyer or accountant - even the banks don't want to be liable for any "advice" that's given at the retail level. Considering
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Apr 16, 2006
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superfresh89 wrote: Yes they would. Proof of downpayment is something you will have to provide to the bank prior to closing.

You'll need to provide bank statements that demonstrate a gradual accumulation of funds for your downpayment OR a gift letter signed by all parties indicating that the money is given freely as a gift. The gift letter option is usually only available if the funds are coming from a direct family member and not extended family.

I'm not sure why you're surprised that the bank rep isn't a tax expert and financial guru.... it's an entry-level sales position - their only job is to identify sales opportunities and sell financial products. In fact, many banks have procedures in place to prohibit their employees from discussing taxation or legal issues, and to direct any concerns to their lawyer or accountant - even the banks don't want to be liable for any "advice" that's given at the retail level. Considering
I'm not looking for nor expecting a tax expert or financial guru working as an "advisor" at the bank when discussing the purchase of my first home or the eventual repayment of my mortgage. However, the questions I had are directly relevant to what I want to do - in this case, buying a house - and involved a program that most bank "advisors" who deal with first time home buyers should be extremely familiar with, being the Home Buyer's Plan. The questions I've had of this individual thus far were far from complicated or within the realm of the unknown for the average "financially competent" individual. They got most of them wrong (which I suppose should have been my first red flag). The question giving rise to this thread was definitely more on the complicated side, but they indicated what I wanted to do was not possible, even though it is clear that is, so long as the timing is correct.

While I'd greatly prefer to deal with people who are competent and that I can trust what they are telling me is correct, I recognize the fact that it is unrealistic for a bank representative to know everything about everything. If they had simply said "I'm sorry, I'm not familiar with this situation, perhaps you should call the CRA and I can also make some inquiries with people who would definitely know", then I'd respect that. Blatantly telling me something is not possible when it in fact is just makes me strongly distrust everything they have told me and everything they will tell me going forward. If you don't know the answer to something, you should be looking into it to make sure you're not misleading the client rather than simply saying it cannot be done.

If the person has been "promoted" to having an office in the bank (and are no longer just a teller), the expectation is that that person has a certain baseline level of competence in the products the bank offers and the various vehicles available for financing said products and whether a person may qualify. I'm not asking for tax advice or legal advice, simply whether this is something that might be possible to implement.

Anyway, there's not much point in continuing on with this thread now that the inquiry has been answered. Thanks to everyone that contributed in helping me figure this out.
Deal Addict
Apr 10, 2017
3047 posts
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IF you think you've been dealing with an incompetent employee then you should do your own research, like what I did and it took me 3 secs:

https://www.theglobeandmail.com/globe-i ... cle546672/

This article answers everyone question you have.

However, let me just emphasize something here:
You'll need to provide bank statements that demonstrate a gradual accumulation of funds for your downpayment OR a gift letter signed by all parties indicating that the money is given freely as a gift. The gift letter option is usually only available if the funds are coming from a direct family member and not extended family.

I'm closing in 2 weeks myself and availing of the HBP. I did it right though - I knew I was going to be purchasing a home down the road (like you said, can be next week or within 1 yr). I knew there was going to be an issue IF I were in your place:"The reason I haven't yet deposited the cash into the RRSP savings account is because I don't want to lock up the funds unless and until we have found the right home for us."

I can tell you myself the money I earn in my RRSPs are larger than my TFSA rate. It did not make sense for me to keep the money in the TFSA. You've also identified the 7k refund which boggles my mind. You should know what you should've done from the beginning.

Just to give you a reality check: say you found the home next week - 90 days would be around September-ish. Families with children in school probably won't agree to 90 days because they need to get settled down in their new community+arrange for schooling. Just hope the home you'll be purchasing is from a family/couple who doesn't have children still in school.
Deal Fanatic
Nov 22, 2015
7846 posts
8793 upvotes
Octavius wrote: I'm not looking for nor expecting a tax expert or financial guru working as an "advisor" at the bank when discussing the purchase of my first home or the eventual repayment of my mortgage. However, the questions I had are directly relevant to what I want to do - in this case, buying a house - and involved a program that most bank "advisors" who deal with first time home buyers should be extremely familiar with, being the Home Buyer's Plan. The questions I've had of this individual thus far were far from complicated or within the realm of the unknown for the average "financially competent" individual. They got most of them wrong (which I suppose should have been my first red flag). The question giving rise to this thread was definitely more on the complicated side, but they indicated what I wanted to do was not possible, even though it is clear that is, so long as the timing is correct.

While I'd greatly prefer to deal with people who are competent and that I can trust what they are telling me is correct, I recognize the fact that it is unrealistic for a bank representative to know everything about everything. If they had simply said "I'm sorry, I'm not familiar with this situation, perhaps you should call the CRA and I can also make some inquiries with people who would definitely know", then I'd respect that. Blatantly telling me something is not possible when it in fact is just makes me strongly distrust everything they have told me and everything they will tell me going forward. If you don't know the answer to something, you should be looking into it to make sure you're not misleading the client rather than simply saying it cannot be done.

If the person has been "promoted" to having an office in the bank (and are no longer just a teller), the expectation is that that person has a certain baseline level of competence in the products the bank offers and the various vehicles available for financing said products and whether a person may qualify. I'm not asking for tax advice or legal advice, simply whether this is something that might be possible to implement.

Anyway, there's not much point in continuing on with this thread now that the inquiry has been answered. Thanks to everyone that contributed in helping me figure this out.
Fair enough.

I actually work in a similar role and I would probably qualify as 'competent' or even 'knowledgeable' in your books.

As you know, there's quite a big YMMV when dealing with anyone, but particularly bank 'financial advisors'.

For example, I've been with the bank for nearly 4 years, have a mortgage of my own (obtained through the bank I work for), went through the HBP process, as well as registered investments thru self-directed brokerages. Flash back to 3 years ago when I first started the role, I was fresh out of university, single, lived with parents, never rented or lived on my own, no savings or investments - yet I was expected to sell people on mortgages, mutual funds, accounts etc. There's a ridiculous learning curve that's really difficult to overcome without actually hitting those financial milestones in your own life.

But yeah, your rep should have just told you that they don't know instead of giving inaccurate info.

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