Terry and his wife Caroline plan to purchase their first home in a year’s time. They will draw down the maximum from the...
Terry and his wife Caroline plan to purchase their first home in a year’s time. They will draw down the maximum from their RRSPs under the Home Buyers’ Plan. They estimate acquisition costs will amount to $10,000. If they want to avoid mortgage insurance costs, what is the most they could pay for a house? Assume they have no savings and investments other than their RRSPs.
- $260,000
- $300,000
- $325,000
- $375,000
Homework Answers
Method for avoiding to pay mortgage Insurance cost , to make a higher down payment at least 20% of value of home.
As per given condition in question , withdrawal up to $25,000 ($50,000 for a couple) is allowed from your RRSPs for first time home buyers.
Terry and his wife Caroline can withdraw up to $ 50,000 from their RRSP account,
=> the most they could pay for a house = $ 50000/ 20% + $10,000 = $ 260,000. Option a.
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