Real Estate

Total Portfolio and First Home Purchase Question

  • Last Updated:
  • Feb 21st, 2021 12:16 pm
[OP]
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Jul 18, 2005
4817 posts
43 upvotes
Toronto

Total Portfolio and First Home Purchase Question

Hi all,

I have a question on how best to put a down payment on a home, while minimizing taxes, transaction costs and not handcuffing myself for the next few years. The last part is the most important as I have the ability to use RRSP savings, but may not.

Background info:
Wife's RRSP = $35k (all cash)
My RRSP = $50k (1/2 invested in stocks)
Originally we placed $35k each in our RRSP's to take advantage of the first time home buyer option but we may not use it.

TFSA (mine) = $65k, fully invested in stocks
Chequing + savings = $150k

Total = $300k in liquid holdings and no debt.
House price = $975k
Combined income = ~$150k/annual
Age = both ~30
Other costs = wedding in next 2 years and kids in next 3 years. Doing an add-on to the home 5+ years from now (likely cost $300K+)

My questions for the community are as follows:
-Is it worth liquidating our RRSP's for the down payment? It's the only time we'll have access to this $70k. 15 years to repay this is a lot of time, however I'm cognizant we will have other expenses down the road. An idea I have is we take the money out for the down payment and 10 years from now whatever I havent funded, I can take an investment loan to fund the RRSP (obviously this comes with the risk that rates rise).
-If I'm confident I can earn a rate of return on my investments > 2% (estimated interest rate on mortgage), is there any downside in me putting down a small downpayment (~10%)? My broker is convinced I should put 20%, save on the insurance and have a 30-year amortization
-We are purchasing a small home and will likely need to sell or expand it 5 years from now. How can I ensure I have the cash available to finance this?
-I want to keep ~$50k saved for the wedding, other expenses and emergency fund.
-Any other considerations to keep in mind?

Thanks a lot everyone.
Last edited by maebach on Feb 21st, 2021 11:43 am, edited 3 times in total.
Heatware PEPSI IPOD MINI WINNER (JUNE 2005)
6 replies
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Jun 26, 2005
9984 posts
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It is 2021 and the virus is here so I suggest you do an extremely simple wedding just have a small ceremony no big dinners or anything like that.

All the photos and videos that my wife and I spent many years ago are now basically junk. Sure they're cool for the next year or so however once you have kids your old wedding photos means nothing.

your house will be showing photos of your kids and videos of their kids your wedding pictures look really silly by that time as well.

So all the thousands of dollars that we spent was basically useless.

And lately I've come to realize that saving old photos it's really pointless. My aunt recently died and she has tons of photo albums but so what no one else cares basically it's garbage. So all the hard drives that we use to back up our old photos with tens of thousands of them are you really seriously going to look at them?

I think we're moving towards new stuff new memories and new experiences yes it's cool to look back for 10 years ago however how long are you going to stay looking at that photo? 5 seconds?

With this money saved put that towards your down payment. Looks like you have enough money so I would put down the 20% for your house

And later on if you want to celebrate have a great honeymoon vacation when this virus is finally under control.
[OP]
Deal Addict
User avatar
Jul 18, 2005
4817 posts
43 upvotes
Toronto
rfdrfd wrote: It is 2021 and the virus is here so I suggest you do an extremely simple wedding just have a small ceremony no big dinners or anything like that.

All the photos and videos that my wife and I spent many years ago are now basically junk. Sure they're cool for the next year or so however once you have kids your old wedding photos means nothing.

your house will be showing photos of your kids and videos of their kids your wedding pictures look really silly by that time as well.

So all the thousands of dollars that we spent was basically useless.

And lately I've come to realize that saving old photos it's really pointless. My aunt recently died and she has tons of photo albums but so what no one else cares basically it's garbage. So all the hard drives that we use to back up our old photos with tens of thousands of them are you really seriously going to look at them?

I think we're moving towards new stuff new memories and new experiences yes it's cool to look back for 10 years ago however how long are you going to stay looking at that photo? 5 seconds?

With this money saved put that towards your down payment. Looks like you have enough money so I would put down the 20% for your house

And later on if you want to celebrate have a great honeymoon vacation when this virus is finally under control.
Thanks. Appreciate the insight! Yes we will likely have a small-ish wedding, but I'd like to keep extra cash on hand for other expenses as well.
Heatware PEPSI IPOD MINI WINNER (JUNE 2005)
Sr. Member
Apr 29, 2010
531 posts
826 upvotes
GTA
maebach wrote: Thanks. Appreciate the insight! Yes we will likely have a small-ish wedding, but I'd like to keep extra cash on hand for other expenses as well.
Yolo into the nicest McMansion you can afford
Sr. Member
Jan 5, 2020
740 posts
1024 upvotes
Definitely you should fully utilize the RRSP HBP. Why would you not take advantage of a 15 year interest free loan? A lot of this loan balance will go away just due to inflation.

I would proceed in this order:
1. $70K RRSP HBP. Liquidate some stocks if required.
2. Then cash in Chequing and saving.
3. Then TFSA.
[OP]
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Jul 18, 2005
4817 posts
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Toronto
Newuserid wrote: Definitely you should fully utilize the RRSP HBP. Why would you not take advantage of a 15 year interest free loan? A lot of this loan balance will go away just due to inflation.

I would proceed in this order:
1. $70K RRSP HBP. Liquidate some stocks if required.
2. Then cash in Chequing and saving.
3. Then TFSA.
I never thought of the inflation impact, thanks. Any thoughts on the lower down payment amount (10% vs 20%)?
Heatware PEPSI IPOD MINI WINNER (JUNE 2005)
Sr. Member
Jan 5, 2020
740 posts
1024 upvotes
maebach wrote: I never thought of the inflation impact, thanks. Any thoughts on the lower down payment amount (10% vs 20%)?
If you have the money, I would just put down the 20% and save the insurance premium

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