If you want to purchase a $550,000 home, you will need
$30,000 down payment
$8,250 for closing costs (this is 1.5% of your purchase price and what you will need to show the lender you have in your account)
Let’s assume you have $25,000 in savings.This means you are short about $13,250
Here’s what you can do
Open an RRSP loan for $15,000, with a cash-back mortgage you can use the cash back to pay the RRSP loan off.
With this purchase price, you will receive approx $16,000 in cash-back.
This $16,000 will be used to pay out the $15,000 cash-back loan
Here’s the math:
High ratio mortgage – with no cash-back
$540,800 with default insurance
5.19%, 5 yr fixed, 25 yr amortization
$3,205 per month
With cash-back mortgage payments
The rate will be 5.94%
New mortgage payment of $3,441
Let’s look at the results $236 increase in mortgage payments each month.
RRSP loan will be fully paid.
Surplus cash in hand on closing.
And we didn’t even talk about the fact that you will likely have a refund when you do your taxes as a result of the RRSP.
And you got to purchase the home you wanted without having to wait and spend that $236 in extra rent payments.
Want to talk about your situation? Connect with us 905-870-0513 or ana@askanacruz.ca
