Financial Literacy Month-BMO's Tip of the Day: Use Your RRSP

Financial Literacy Month-BMO's Tip of the Day: Use Your RRSP to Help
Make the Down Payment on Your First Home 
TORONTO, ONTARIO -- (Marketwire) -- 11/04/12 -- To mark Financial
Literacy Month, BMO Financial Group is releasing a series of
financial tips throughout November. As part of 'Making Money Make
Sense' and BMO SmartSteps, the tips are designed to help individuals
and families save and manage their day-to-day finances more
BMO's Tip of the Day: Use your RRSP to help make the down payment on
your first home. 
The down payment is a lump sum you are required to contribute to your
home's purchase price. Depending on the amount, a mortgage is
classified as either "conventional" (a down payment of 20 per cent or
more) or "high ratio" (a down payment of less than 20 per cent
requiring default insurance). 
One way to come up with a bigger down payment is by using your RRSP
savings, under the federal government's Home Buyer's Plan (HBP). As a
first-time homebuyer, you may be eligible 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. 
You are required to repay your HBP withdrawal into your RRSP within a
period of no more than 15 years. Although you can repay your HBP
earlier, the deadline for your first minimum annual repayment is two
years and 60 days after the year in which you made your HBP
withdrawal. The minimum annual repayment is equal to 1/15 of your
original HBP balance and if you repay at least the minimum each year,
there will be no tax payable.  
"If you are able to provide a bigger down payment, it's a significant
way of helping you pay less interest over the life of your mortgage.
Also, with a down payment of at least 20 per cent, you avoid paying
mortgage default insurance," said Laura Parsons, Mortgage Expert, BMO
Bank of Montreal.  
Ms. Parsons added that Canadians should be considering the benefits
of choosing a shorter amortization as a way to decrease total
interest costs and to begin building home equity sooner.  
BMO Financial Literacy Month Tips 
November 1: Maximizing TFSA investments annually over 20 years can
save nearly $30,000 in taxes. 
November 2: Utilize Rewards to Squeeze the Most Value Out of Every
ar You Spend this Holiday Season. 
November 3: Choose an Investment Advisor Who Is Right For You and
Will Help You Meet Your Financial Goals. 
For more on financial literacy, Canadians can visit the Government of
Canada's Financial Literacy Month website, as well as BMO's Financial
Literacy online resource.  
CFEE works to promote and assist the enhanced economic capability of
Canadians. To learn more, visit 
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 $542 billion as at July 31, 2012, and more than
46,000 employees, BMO Financial Group provides a broad range of
retail banking, wealth management and investment banking products and
Media contacts:
Jessica Park, Toronto
(416) 867-3996 
Valerie Doucet, Montreal
(514) 877-8224 
Laurie Grant, Vancouver
(604) 665-7596 
Twitter: @BMOmedia
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