Is using your RRSP to buy a house passé?

THINK OUTSIDE THE BOX:  The $25,000 Ottawa allows you take out of your retirement fund to buy your first home sure doesn’t go as far as it used to.
The Financial Post’s Melissa Leong explains why RRSPs are much like your beloved social media and as deserving of your attention.
Under the home buyers’ plan, Canadians can take $25,000 out of their registered retirement savings plan and pay it back over the next 15 years without incurring any penalty. For a couple that means $50,000.
But the dollar amount has been stuck at $25,000 since 1999 while house prices have continued to escalate. At $50,000, you’re barely making the  minimum downpayment if you are buying a home in Vancouver with a mortgage backed by the government.
The Canadian Real Estate Association says the average price of a home will climb to $391,000 next year, meaning that $50,000 is less than 13% and not enough to avoid costly mortgage default insurance.
“I don’t know how effective the plan is now, so I’m not sure what would happen, if you increase the amount,” says Don Lawby, chief executive of Century 21 Canada.
It’s not just the amount. The tax-free savings account is now just as an effective savings vehicle. As of 2014, Canadians were allowed to contribute $31,000 and the amount increases every year. You can also withdraw money from a TFSA and put it an equal amount back later.
http://business.financialpost.com/2014/01/29/is-using-your-rrsp-to-buy-a-house-passe/

Garry Marr | January 29, 2014 5:51 AM ET – FINANCIAL POST
More from Garry Marr | @DustyWallet

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