Should you use your RRSP to buy a first house? Buying a first home can be tough. Under the Home Buyers’ Plan you can use your RRSP to help. Should you?

Buying a  first home can be a tough journey. Especially trying to come up with a 20 per cent down payment in order to avoid having to purchase mortgage loan insurance. 

Under the Home Buyers’ Plan (HBP), first time homeowners can borrow up to $25,000 tax free from their RRSPs to buy or build a home. If you are purchasing a home with a spouse, you can each withdraw $25,000 if you qualify. 

Here are a few things to consider: 

The Pros 
• If you can use your RRSPs under the plan to make that 20 per cent down payment, you might not only avoid paying the mortgage loan insurance, but you could also qualify for a lower interest rate. 
• With a larger down payment, your monthly mortgage payments will be smaller 
• This is one of the only ways to make a tax-free withdrawal from your RRSPs 
• Your RRSP can help you buy your first home if you don't have much in terms of savings. This is a great option for young adults. 
• There is no penalty for repaying more each year than what your scheduled payment amount is. 
• It is a tax-free and interest-free loan over a 15-year span. 

The Cons • You will lose years of compound growth, depending on how fast you reinvest your money. 
• The HBP means that you are taking on debt. Except, instead of owing to credit card companies or the bank, you owe it to yourself. 
• If you don’t make your repayment each year, the unpaid amount is fully taxed as income for that year. 
• If you declare bankruptcy, you will still need to make payments back into your RRSP each year. 

My Plan 
When it comes time to buy my first time, I will definitely be utilizing the HBP. The Vancouver real estate market is expensive. So for the past four years, I have been saving for part of my down payment by contributing to my RRSP. This allowed me to receive a tax refund each year, which I reinvested back into my RRSP. 

The reason why I am confident in using my RRSPs to help pay for my down payment is because I am an aggressive saver. I invest between $8,000 and $10,000 a year in my RRSP, so I know I will be able to contribute towards my future and have my retirement account back at its previous amount within just a few years. This means I will minimize my loss in compound growth, and fully benefit from avoiding the mortgage loan insurance by having a 20 per cent down payment. 

Plan eligibility • You have to be a first-time home buyer (or buying for somebody who is disabled) and a resident of Canada. 
• You must intend on living in the house purchased under the HBP within one year of purchase or completion. However, there is no minimum amount of time that you have to stay there. 
• You must have entered into a written agreement to buy or build a home. 
• You cannot own the home for more than 30 days before the withdrawal. 

Plan rules • Starting the second year following the year in which you made the withdrawal, you will need to start repaying the money back into your RRSP. 
• You have up to 15 years to repay the full amount, where each year 1/15th of the total amount is due. For example, if you withdrew the entire $25,000, you would have to make payments of $1,666 each year for the next 15 years. 
• RRSP contributions made less than 90 days before your withdrawal date cannot be used towards the HBP. This means you wouldn’t be able to make a last-minute contribution into your RRSP in order to take it out again for the HBP. 

For more information on eligibility and rules, please visit the CRA website. 

Repaying the HBP 
You don’t actually have to make your first payment until the second year following the year in which you made your withdrawal. For example, if you withdrew your money in 2010, you wouldn’t need to make your first payment until the tax year of 2012. 

The annual repayment amount is determined by the total amount you have borrowed from your RRSP, divided by 15. If you pay more than the minimum each year, future payments will be the remaining amount owing divided by the number of payment years you have left to go. 

Your notice of assessment will have all of your Home Buyers’ Plan information on it, including payments due, so you won’t have to calculate the payments yourself. 

Would you consider using the Home Buyers’ Plan? 
Krystal Yee is a marketing and graphic design professional living in Vancouver. She also blogs at Give Me Back My Five Bucks.

Investors helping 'drive' the market, says report

Investors helping 'drive' the market, says report

Written by  Jemima Codrington - Canadian Real Estate Magazine

Are investors the driving force behind Canada’s housing market?

A new survey from RE/MAX, “RE/MAX Canadian Homebuying Trends Survey 2013-2014”, reveals that multi-time buyers are accounting for 41% of all home purchases in Canada. Combined with second-time buyers, the number of buyers purchasing property for the second time or more will account for 70% of home purchases.

Gurinder Sandhu, Executive VP Regional Director REMAX Ontario and Atlantic Canada, says investors fall under this umbrella.

“There are a fair number of investors in that multi-buyer category,” he said. “The challenge is we don’t know how many.
“We know based on discussions with our realtors that there is an increasing number, because over the past 17 years, real estate has been a sound investment.”

Sandhu was also quick to point out that immigration in urban areas is helping to prop up the condo market, despite fears that it’s in bubble territory.

“We still see demand for that product because it represents a product that is more affordable than others,” he said.
RE/MAX surveyed 1,109 purchasers who intended to buy over the next two years, and found that 39 per cent of those surveyed were multi-time buyers, 31per cent were second-time buyers and 30 per cent were first-time. The demographic is a shift from previous years as investors took the helm early last year and dove into the market.

"Between 2009 and 2011, first-time buyers were the engine driving housing activity, taking advantage of favourable conditions and a recovering economy," says Elton Ash, Regional Executive Vice President, RE/MAX of Western Canada. "That changed in 2012, and even earlier in B.C., as prices reached a breaking point.”

But when quizzed about prices, the response was remarkably positive considering the current climate. 48 per cent of respondents believed housing values will rise, while 35 per cent believe they’ll remain the same. And according to the report, low vacancy rates and higher rents have driven some survey participants away from the rental market and into homeownership. When considering a property type, the majority of buyers were interested in larger properties, and lifestyle and investment were noted as “principle drivers” in the decision to purchase.

The survey also revealed a higher number of women active in home-buying. "Our Realtors   have definitely seen an upswing in the number of female homebuyers active in the market in recent years—and the survey confirms those anecdotal accounts," said Ash.

However the numbers stack up, the report generally indicates that mature, seasoned buyers are taking the helm and profiting from the current market. "Today's real estate consumer is more experienced and financially prudent than in the past," added Ash, “it seems the lessons of excess are being heeded."

Fewer investors, homeowners looking to sell: report

Fewer investors, homeowners looking to sell: report

Written by  Vernon Clement Jones - Canadian Real Estate Magazine

National home sales slipping 17 per cent in December from a year ago, according to new report from the Canadian Real Estate Association, suggesting investors are no more anxious to sell than homeowners.

"Sales activity continues to hold fairly steady at lower levels since mortgage rules were changed earlier in 2012, said CREA President Wayne Moen Tuesday, “but there are still some real differences in trends between and within local housing markets."
More generally, national home sales edged 0.5 per cent lower in December 2012 compared to November, and actual activity was down 17.4 per cent year-over-year.
A large part of the equation is the falling number of listings, said one analyst. They dropped 1.3 per cent from November to December, something that may encourage buyers now in the marketplace to act sooner rather than later. But the decline also points to the growing number of investors now opting to hold onto their current portfolios rather than sell up to access equity.

"While some will focus on the deep dive in sales from a year ago, it looks as though prices are providing a better read on the health of the sector, as homeowners are in no rush sell," write economists at BMO, referring to the new data. "Prices are easing gently, consistent with a soft landing through much of the country."

Fewer listings mean those investors looking to add to their holdings will likely be challenged, especially in terms of small multi-family properties.

Still, the challenge of new mortgage rules introduced in July remain, with many analysts writing off the possibility of a repeat of last winter’s brisk activity as buyers sought to get an jump on the spring competition.

That activity was spurred, in part, by unseasonably warm weather.

In 2012, a total of 453,372 homes traded hands over the Canadian MLS system, which represents a decline of 1.1 per cent from 2011 and 1.4 per cent below the 10-year average.
The downward trend is actually in line with projections for this year, with Jim Flaherty’s new mortgage rules bearing the brunt of any blame.
Still, investors anticipating an even greater shift to the current landlord's market may be disappointed.

The government isn't expected to further tighten rules this year. The Finance minister has suggested the government is satisfied that its move to lower the amortization on insured mortgages, along with other key changes – in addition to OSFI’s new lending guidelines – have already begun to de-accelerate consumer debt.

Barrie: City may spend $10M on software to save big money down the road

Mayor Jeff thinks our City is "in the dark ages". Here's what happened at City Council the other night...

The city could spend millions to save both money and improve its core information systems.

Barrie councillors gave initial approval Monday to the business case for enterprise resource planning (ERP) software and its systems.

The estimate to buy the software, design it and install it is approximately $10 million, and it will take three years to fully implement. Plus it will cost $320,000 annually to operate, starting in 2015.

Benefits are estimated at $15.5 million for the city during the next decade, including expected cost reductions worth $12.5 million for goods and services purchases. 

ERP is software to replace many stand-alone systems and manual work processes, and integrates these functions into an automated system based on a centralized database accessible across the corporation.

"The city's core information systems no longer meet its needs, and to properly manage an organization with more than $3 billion in assets under its control, annual spending in the $300-million range, and significant growth costs on the horizon, an ERP is necessary," said Ed Archer, Barrie's general manager of corporate services.

"We're in the dark ages. We are still operating like a small town," said Mayor Jeff Lehman. "This one's a no-brainer for me."

City CAO Carla Ladd said it was like comparing a bank with lineups and deposit slips to one with debit cards and ATMs.

"It isn't if we do this system, it's when we do this system," she said of the ERP. "There are so many benefits."

Ladd mentioned ERP would virtually eliminate paperwork and could cut service delivery by two-thirds.

Only Coun. Bonnie Ainsworth spoke and voted against ERP, saying she didn't want to approve the spending until she sees the 2013 capital budget, which is debated in January.

She said the city might have other priorities.

"We have a crumbling infrastructure in this city," Ainsworth said. "There are 33 kilometres of roads that need to be constructed.

"I don't feel the decision should be made in isolation of the impact on the business plan and long-range plans." 

But the other councillors wanted to go ahead

"I don't see any downside," Coun. Barry Ward said. "Just because there is something you can't touch or you can't see or drive on, that doesn't mean it isn't a valuable investment."

"The timing dictates that we move forward, especially with the annexed (former Innisfil) lands," said Coun. John Brassard, of the south-Barrie property that will be developed during the next decades.

Currently, Barrie's financial system consists of separate, non-integrated systems requiring expensive and inefficient manual steps to complete transactions. City staff says it does not not meet the business needs of Barrie residents, customers or employees.

These information systems are fragmented, incomplete and don't provide timely information. This means service levels are lower and less efficient than they could be, because work processes and information systems are incapable of meeting demands placed upon them.

These inefficiencies are not readily apparent now because city staff make the extra effort to address information needs, but that can't last.

Archer says ERP will eventually fix these inefficiencies.

"This will increase the assurance that decisions about residents' tax dollars are based on the best available information in a timely way," he said. "And staff will have better information for program management and oversight. The risk of cost overruns on projects or inadequate service levels because plans did not accurately predict how things would actually work will be much lower." 

The city budgeted $450,000 for a business case study about how ERP would support specific corporate information needs, processes and service capacity.

Archer said less than half that amount was spent on the report presented Monday by Deloitte & Touche LLP, a London firm.

ERP funding is included in the city's capital budget.

Council will consider final approval of a motion to move ahead with this plan at its Dec. 17 meeting.

Barrie Residents attack south-end plan

Barrie Examiner

South-Barrie residents voiced their disapproval Monday to townhouses and eight-plexes in their single-family neighbourhood.

During a public meeting that took nearly two hours, about 30 people spoke against the proposed development at 461 Mapleton Ave.

The 101 residential units would add traffic and crime, cut safety for children and hurt property values in the area - city councillors heard.

"We need to put the safety of our children first, absolutely first," said Marlene Kane. "I'm all for growth, but let's grow safe and let's grow smart."

Her daughter, Nicole Kane, said she's a former St. Joan of Arc student and the traffic in this area is already bad.

"I can attest to how difficult it is to cross Mapleton," she said. "It isn't just (unsafe) for children, but for teenagers crossing the street."

Larry Black, who lives at the top of Mapleton, also said the street is dangerous now.

"Cars come up that hill very fast," he said. "That hill is already a risky one and you (the developer) are just going to add to it."

Many speakers said they moved to this area because it is a single-family neighbourhood, and don't want townhouses there because it could mean renters and absent landlords.

"Reconsider this plan and develop it into something that everyone in the area would find desirable," said Jennifer and Alastair McMurachy in a letter to the city, "such as additional single-detached homes, a library, commercial space or an additional soccer/rugby field.

"The building of eight-plexes is not what the safe and quiet area needs right now."

Residents also said there wouldn't be enough parking in this development and that congestion would only get worse in the area.

This five-acre property - located on the south side of Ardagh Road, west of Mapleton - is a former school site no longer needed by the Simcoe County District School Board for that use. The developer is a numbered Ontario company.

Its rezoning and Official Plan application will now be considered by the city's planning department, which will prepare a staff report. It's expected to be dealt with by Barrie councillors later this winter or in early spring.

Coun. Michael Prowse, who represents this part of Barrie, does not want the property to be medium or high-density residential.

But Coun. Alex Nuttall said townhouses do not necessarily mean more crime and renters who are bad neighbours, as some of the speakers Monday expressed.

"Be careful with your broad strokes about townhouses," he said.

City councils in Barrie have long dealt with the frustration of residents in new developments with planned school sites. They expect their children to be able to walk to school, then an education board decides the school is not needed.

The children are bussed to class instead, and more residential units are built on the former school site – adding additional people and vehicles to the area, especially if it's intensified development.

City staff didn't recommended park use of this land. Its estimated purchase price of $1.5-$2 million would have virtually emptied the parkland reserve fund of $2.1 million at the time. A sports fields, landscaping, parking and other infrastructure costs could add another $1 million to the price tag.

Staff looking at building soccer and/or baseball fields there note soccer participants has dropped by 800 since 2010, and the city doesn't need any new ball fields until after 2019.

City of Barrie - Urban Growth Centre Showcase - Video

City of Barrie celebrates its vibrancy through many festivals throughout the year. There are many things to do, with its close proximity to everything. It's not just a City...it's a lifestyle. Great waterfront community and truly is a great place to live, work and play!

$56 Million Dollars worth in upgrades - County Road 90

More than $56M in upgrades in the works for County Road 90 expected to take six years 

One of the busiest roads in the county is up for a facelift.

 As part of the Simcoe County Transportation Master Plan, County Road 90 between Barrie and Angus will be reconstructed over six years. The project begins next year and is expected to be done in 2019.

Average annual daily traffic studies for the road show 19,400 vehicles use it daily from Barrie to George Johnston Road, and 16,500 vehicles travel on it from George Johnston Road to Angus.

Because of growth in the area and the increasing number of users, the busy highway between the two municipalities will be reconfigured to five lanes, including a middle turning lane.

“It’s mainly because of the high volume of traffic that requires us to widen the road,” said Rick Newlove, Simcoe County’s general manager of engineering, planning and environment, adding there have been numerous collisions over the years, including some fatalities. “A lot of people use it as an alternate route to Wasaga Beach and Collingwood area.

“There is lots of access along there. People who are travelling and are in a hurry sometimes do things they shouldn’t,” he added. “This will avoid them having to pass someone who is travelling too slow, and they’ll be able to make a left-hand turn without fear of being rear-ended.”

The road has taken its toll over the years, according to OPP Sgt. Peter Leon.

“Just over 10 years ago, I responded to a two-vehicle crash on that stretch that resulted in five people being killed. A family of four in a car and a driver in a pickup collided head-on,” he said. “Any enhancements to a heavily travelled roadway that make it safer are fully supported by the OPP.”

The preliminary estimated cost at this time for the upgrades is $56.5 million, pending budget approvals. The project includes two major bridges, one over the CP rail line and another over the Nottawasaga River.

“The environmental assessment is complete and the county is purchasing property and looking at moving utilities out of the way, things like hydro, natural gas, (telephone), cable, fibreoptics,” Newlove said.

In January 1998, the Ontario Ministry of Transportation downloaded the road to the county, along with some other roads, including highways 50, 26/27 and 11.

This will coincide with the transit upgrades to Angus. For more on that click here

Courtesy Ian at Barrie Examiner