CREA, with more than 100,000 agents, brokers and salespeople, has made a 2018 pre-budget submission proposing changes to the Home Buyers’ Plan (HBP).
The Home Buyers’ Plan (HBP) currently allows a first-time buyer to withdraw up to $25,000 from an RRSP account to help purchase or build a home, the CREA wants to expand the program so that parents can withdraw from their RRSPs for their children to help purchase a home. Under the plan both parents would be eligible to take funds from their accounts, the CREA would also like to raise the maximum withdrawal limit to $35,000.
The government requires that RRSP withdrawals are paid back within 15 years.
Family already plays a big role in financing first-time buyers. A survey by Genworth Canada, a mortgage insurer, found that 22 per cent of first-time buyers received a gift from a family member and 12 per cent received a loan.
“As many parents are already ‘loaning’ their savings to their children, a formalized mechanism which allows for the transfer of RRSP savings would help not only increase the available down payment and reduce the amount borrowed, but also limit risk to the lender,” CREA contends.
The intent of CREA’s proposals is to provide the opportunity for young Canadians to own a home.
CREA is also recommending an expansion of the home buyer’s program beyond first time buyers and to include those who have undergone major life events, such as a divorce or relocation for work.