Saving up for a down payment on your first home can seem like a goliath task these days. With the average house price in the GTA fluttering around $700,000, the notion of making a dent in your savings on a down payment may seem daunting, if not insurmountable.

If you’ve already been saving your nickels for retirement, there is some help to be had thanks to a federal government program known as the Home Buyers’ Plan (HBP). The HBP lets first-time home buyers withdraw up to $25,000 from an RRSP to put toward the down payment on a house. Since a couple can each withdraw funds they can pool their assets and withdraw as much as $50,000. How that benefits first-time home buyers is that the funds withdrawn from the RRSP are not immediately taxed as long as you meet the deadline to return the funds within a specified time.

Do you qualify?

You do if you or your partner did not own a home that was your principal residence in the four calendar years prior to purchasing a house with an HBP.

Pay back

It’s an unfortunate reality but under this Canada Revenue Agency program, the RRSP funds have to be paid back within 15 years. The good news is that you don’t have to start paying back your RRSP until the second calendar year after the withdrawal. So if you used the HBP in 2018, you have until 2020 to start paying back your RRSP.

No tax benefit

Because you are paying back what you originally contributed to an RRSP, there is no tax relief as you would have experienced the first time around.

Expectations

You are expected to make payments every year under the HBP and the repayment expectations are far from onerous. Annual repayments are 1/15 th of the withdrawal total so if you borrowed $15,000, your annual repayment would be $1,000 per year for 15 years.

If, for some reason, you can’t meet the yearly repayment or can only manage a part of it, then the payment or the part that you couldn’t pay is added to your taxable income.

The HBP has been in place since 1992 and though some critics say it should be scrapped because people need to save for retirement, others say its absence would harm the housing market.