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.
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.
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