TORONTO, ONTARIO--(Marketwired - July 22, 2013) - As part of BMO Financial Group's ongoing commitment to financial literacy and 'Making Money Make Sense', BMO is releasing a financial tip every day in the summer to help Canadians make the ' BMOst of summer' in 2013.
BMO's Tip of the Day: Use your RRSP to help make the down payment on your first home.
For Canadians looking to purchase their first home this summer, one way to come up with a bigger down payment is to take advantage of the federal government's Home Buyer's Plan (HBP). The HPB allows you to make a tax-free withdrawal of up to $25,000 from your RRSP. If your spouse qualifies, he or she may do the same, for a combined total of $50,000.
According to a BMO survey, the average amount first-time buyers plan to spend on their home purchase is approximately $300,000, with an average down payment amount of $48,000 (16 per cent).
"A bigger down payment can significantly reduce the interest you'll pay over the life of your mortgage. Also, with a down payment of at least 20 per cent, you avoid having to pay mortgage default insurance," said Frances Hinojosa, Mortgage Expert, BMO Bank of Montreal. "First-time home buyers should stress-test their mortgage against a higher interest rate to ensure they can manage a rise in costs as a result of a potential increase in interest rates down the road."
Ms. Hinojosa added that it's also wise to choose a mortgage with a shorter amortization, which can help homeowners become mortgage-free sooner.
BMO offers a number of products and services that can help Canadians get more out of every dollar they spend this summer. For more details on how to make the ' BMOst of Summer,' drop by a BMO branch or visit www.bmo.com .
About BMO Financial Group
Established in 1817 as Bank of Montreal, BMO Financial Group is a highly-diversified North American financial services organization. With total assets of $555 billion as at April 30, 2013, and more than 46,000 employees, BMO Financial Group provides a broad range of personal and commercial banking, wealth management and investment banking products and solutions.
