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Old 2011-05-03, 03:51 PM
mike407 mike407 is offline
Regular User
Join Date: Apr 2011
Location: Ottawa
Posts: 44

I was told the same thing by my bank (BMO). Apparently, any remaining RRSP loan balance must first be paid off before funds can be withdrawn as part of the first-time home buyer's plan. If you choose to go ahead with it, any withdrawal you make will first be used to pay off the balance remaining on the loan.

I am in a similar position where most of my upfront savings will be spent on the builder's deposit requirement so I am counting on RRSPs to cover the rest of the downpayment + closing costs. I know it's disappointing but the banks secure these loans to the investments so once the investment is gone, the loan has to go with it.

It's a great idea to maximize your tax return and get some immediate cash. However, my advice would be pay back the RRSP loan as quickly as possible.

If anyone else has any ideas to get around this dilemma or can offer any different experiences with their bank, I would love to hear...
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