Organizing my finances for purchasing an apartment

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jonlee0507
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Organizing my finances for purchasing an apartment

Post by jonlee0507 »

I may purchase an apartment unit in Vancouver within the next year (target range is $400,000). I have already used my first time home buyer credit to help my parents purchase their home. I have $15,000 in RRSP, $14,000 in TFSA, and$13,000 in savings. My annual salary is $75,000. I am wondering how I should organize my finances to make it as efficient as possible.

1) Should I be investing the $13,000 in my savings account in a short term investment fund and withdraw the full amount if I do decide to purchase an apartment? If I do invest the money, should I put it in an RRSP or TFSA account? What sort of short term investment do you suggest that I look at?

2) If I do decide to purchase the apartment, should I withdraw the money from my RRSP and TFSA account?

3) My girlfriend and I may decide to purchase this apartment together. We both have a similar salary, investment, and savings amount. Unlike me, she has not used her first time home buyer credit. How would it work if she used her first time home buyer credit and I contribute to half of the down-payment/mortgage?

4) Are there any other options my girlfriend and I may have missed that can be beneficial in my situation?
Spudd
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Re: Organizing my finances for purchasing an apartment

Post by Spudd »

You can't use the RRSP home buyer's plan because that's only for first time home buyers. If you withdraw from your RRSP, you'll have to pay tax on that money at your full marginal rate, plus you'll lose the RRSP contribution room. So personally, I would consider that option off the table. Leave the RRSP money where it is.

You can definitely withdraw from the TFSA though. I would put the $13k in the TFSA assuming you have enough contribution room. Invest it in a high interest savings account or a 6 month GIC. Nothing risky since you will be needing it soon.

Google provided me with the following webpage which seems helpful:
https://www.notaries.bc.ca/resources/sh ... emId=21698
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Insomniac
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Re: Organizing my finances for purchasing an apartment

Post by Insomniac »

Spudd wrote: 05 Feb 2018 11:06 You can't use the RRSP home buyer's plan because that's only for first time home buyers.
I used funds from my RRSP to buy my second home. Rules are here:
https://www.canada.ca/en/revenue-agency ... yearperiod
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Re: Organizing my finances for purchasing an apartment

Post by Spudd »

Good point, Insomniac. I forgot about that.
Just a Guy
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Re: Organizing my finances for purchasing an apartment

Post by Just a Guy »

Historically speaking a mortgage should not be more than 2.5-3 times your income. At $75k, that would be well below your 400k.

With low interest rates, it wasn't such a big deal, but interest rates are now on the rise and I expect you'll feel the impact of them come renewal time.
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