How Much Can We Take from our RRSPs for Our House? How the Home Buyers Plan Numbers Work

Buying a first home can be very stressful. Most of us will need to find as much money as we can to make a good down payment. A common source of down payments in Canada is withdrawals from personal Registered Retirement Savings Plans under a program called the Home Buyers Plan. It’s not always clear exactly how much you can withdraw. Here are the rules.

No RRSP, No Luck

If you don’t have any money in your RRSP, you can’t get any money out of it when you purchase your home.

Small RRSP, Small Down Payment

If you do have money in your RRSP and you have less than or exactly $25,000, and it’s been there for at least 3 months (90 days) before you want to use it to buy your home, you can take the whole amount out.

Whopping RRSP, Modest Down Payment

If you have more than $25,000 in your RRSP, and it’s been there for at least 3 months (90 days) before you want to use it to buy your home, you can only take out $25,000. Any additional withdrawals from your RRSP will be added to your income for the year and taxed at a your highest tax rate. You won’t be able to re-contribute those withdrawals above $25,000 in later years, either. And you will have to pay some of the income tax owing on the money before you can withdraw it not just by April 30.

Buying a First Home with a Spouse

Your spouse can also make a withdrawal following the same rules. So the most you two could withdraw as a combined total is $50,000.

You Can’t Share RRSP Room with a Spouse

If you have, say $30,000 in your RRSP and your spouse has $20,000 in his RRSP, the most that can be withdrawn is $55,000. You can’t withdraw more than $25,000 even if your partner is short of the maximum.

I Have 3 RRSPs. Can I Withdraw from All of Them?

Sometimes people have RRSPs at several financial institutions. They may have GICs at a trust company, Streetwise Funds at ING Direct, and stocks in a self-directed brokerage account.

You can withdraw your investments from any of your RRSP accounts. The total withdrawal is limited to $25,000 though and it must have been contributed more than 3 months (90 days) before the withdrawal.

Can the Bank Charge Me to Withdraw from my RRSP for the HBP?

Yes.

No tax has to be withheld on withdrawals from a RRSP for the Home Buyer’s Plan. However, a bank or financial institution can still charge you a fee to take out the money. Fees of $100 are not unusual.

If you are getting a mortgage from the bank that holds your RRSPs you may be able to ask to get the fee waived. They should want your mortgage business badly enough to give up the $100 or so fee.

Can I Withdraw Funds from a LIRA or a Group RRSP?

Usually you can NOT withdraw funds from

  • a locked-in retirement account (this is the kind of account you get when you leave a job and they give you some or all of your future retirement funds as a type of RRSP)
  • a group RRSP (these are usually a type of pension plan available through your job)

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If I Bought 30-Year Shingles Why Is My Roof Leaking After 10 Years?

When we bought our house we budgeted to replace the roof before making our offer. While it was wonderful that the roof had lasted 30 years (!) without a problem, we didn’t want to risk water damage by waiting for a catastrophic failure before replacing it. We did, however, hope to have it last another 30 years. We certainly didn’t expect it to leak after 10 years.

Picking a Roofing and a Roofer Took an Investment of Time

Before we had the roof done we researched the types of shingles available. Metal roofing was beyond our budget so we didn’t have to evaluate it. We picked a manufacturer first, then a product line and finally a colour. We chose a light grey colour to reduce the overheating a darker roof colour can experience. The previous shingles were a light, almost white, grey, so we knew the aesthetics would be acceptable.

Next we had to find a roofer we could trust. We checked references and years in business and some other factors. Finally we had to just pick one and have faith.

Attention to Details During Roofing Installation Makes for a Happier Customer

They did an excellent job with the installation. They spread huge cloth drop sheets on all four sides of the house to catch as many runaway nails as possible before the stripped the old roof off. The sheets also protected the shrubs and bedding plants. They used magnet finders to pick up a few more nails and bits that escaped the tarps. They kept the packaging in the dumpster not blowing down the street (like my neighbour’s roofers.) And they did the job promptly and efficiently. We were pleased.

Eight years passed.

The Warning Watermarks: Signs of a Roof at Risk or Something Unexpected?

In the ninth year, though, a small circular mark appeared in the ceiling of one of the bedrooms. It was about the size a coffee cup leaves behind. It was just a very pale yellow mark. It didn’t even show up from some angles. I kept an eye on it and it never got any larger. It also was not damp to the touch.

At first I considered an animal problem in the attic but the total absence of noise day and night made it unlikely. (Ok, I admit I have a rat phobia. I only was really happy when I lived in Alberta, home of the Rat Patrol!)

So the culprit was obviously water but from where? It could be from the roof. When it was safe, we went up and checked for possible problems. Sometimes the flashing near vents and the chimney can shift and let water in. Sometimes a shingle can split or lift. There wasn’t anything obvious.

The problem was the leak mark appeared in winter. That made it possible that the problem had nothing to do with the roof. We had just discovered, to our dismay, that one of the bathroom vents did not route outside. It just dumped warm moist air into the attic. There was no window in that room, so there was no other way to get the humidity out of the house. But if you put moist air into a cold attic, it is going to condense and then eventually freeze. If warmed up it could thaw and drip. Was our water coming from outside of the house through a leaking roof, or from condensation from the shower?

Why not Examine the Inside of the Roof?

In most homes, the logical answer would be to crawl into the attic and find out. Unfortunately, our house just has a 0.5 m high crawlspace that is filled with blown insulation. There is literally no way to get in. If you did get in, presumably by shoveling, you still couldn’t move forward unless you wanted to emulate a mole.

Nothing more happened till the tenth year. Then, a second spot appeared. Although also small and difficult to see it was worrying.

The Hunt for Roofing Experts

Of course by now our excellent roofer had retired and closed his business! So calling him out to find the problem was not an option.

We started calling roofers based on references from friends and relatives. They sent estimators to look at the problem.

Quotes ranged from $1000 to $7000. That doesn’t exactly inspire confidence.
Even more worrying, to me, was some of the roofers were just talking about pulling off the shingles and putting new ones down. I couldn’t see how that would actually FIX the problem. It might delay the problem for another 10 years, but that was ridiculous. I wanted to know why the roof was leaking and address the actual problem not just put another fancier wrapping paper on top.

It’s important to understand that a visual inspection of the shingles showed no problem. There were no cracks. There was no loss of granules. There really was nothing visually wrong even on close inspection.

What the Roofing Expert Found and Why It Made Sense

Until we got a roofer who actually cared to look closely. Although I showed the two water stains to every estimator, he was the first one who used some brain power while looking at them. He then popped up on the roof. He took his cell phone with him and took photos.

Five minutes later, he had the problem pegged.

The problem happened when the roof was shingled for the second time. At that time, the vents were replaced. The plywood, however, was not replaced.

And here comes the kicker:
And the new vents were slightly smaller than the old vents.

That means that the holes in the plywood were slightly too large for the new vents to fill. Over time, the plywood had warped just slightly enough to allow a very small amount of water to occasionally creep in under the vents. He took photos to show the problem and took the time to show them to us.

His solution: a $500 job to fix the actual problem. He even gave us a written warranty that the roof would now last another 7 years minimum without a problem.

Years later we haven’t had a single mark appear on the ceilings. I don’t really expect one to, but I keep an eye out.

Fix the Problem with the Roof Don’t Just Delay It by Re-Shingling

I’m glad we kept pushing until we found an actual cause for our roofing problem and fixed it. We could have spent thousands replacing shingles without actually stopping the leak. And the perfectly sound existing shingles would have been cluttering up a landfill somewhere years ahead of their time.

Do I wish the first roofer had noticed the vent size problem and replaced the plywood then? Yes. But mistakes happen. At least this one could be resolved quickly and easily at a fairly low cost.

Here’s hoping we do get 30 years from the roof.

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Have you had a roof fail unexpectedly? Did you find an unexpected cause for the problem? Please share your experiences with a comment.