Oh I'm tickeddddddddddd REALLYYYYYYY Ranting

[MillieH]

Oh my freaking gosh.... the CREA has lost their freaking minds... they are suggesting parents who have saved for their retirement should be able to dip into their RRSPs so they can "loan" the money to their kids so they have a bigger downpayment.. They not only suggest that it would lower the possible loss for banks but would lessen the financial burden on the kids..... How is the burden less if they kids have to pay both the bank and the parents back? Ummm what about the aging parents who have less money to retire on????????????????? I can believe that someone was idiotic enough to think of this but why they think its a good idea is way beyond me.. Other than the fact that it would increase housing costs of course and put more money in their pockets... Lordie~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

https://www.ctvnews.ca/business/crea...rsps-1.3702165

[MillieH]

They actually suggest that both parents be able to withdraw these amounts.. .. Imagine your kids coming all excited and saying.. oh you guys can do this..we'll pay you back, etc etc etc.. of course the parents will be at the bottom of the list when the car breaks down, the kids need meds . if parents refuse.. they possibly feel bad and the kids feel bad........ its a freaking mess..

[luckbealady]

Agreed - that is so self serving of the CREA. They could care less about financial burdens and stress.

I loaned my brother & sister-in-law $3,000 (all my money from a summer job before I headed back to school), and my parents loaned them $8,000 towards their down payment. Part of their mortgage was that they received their down payment back - so it's not like that money was really gone, just in holding.
It still took them well over 2 months AFTER they got the money back from the bank to pay us back. And part of it was my parents pushing them, because it was the end of November and I needed that money for Christmas presents.

RRSP are not something that should be touched to give out loans to family members. They should be left to help sustain your retirement, and that's it.

[walkonby]

This is not a good idea......even if your kids end up resenting you, don't do it!!

[Frugalbigmama]

Agreed - that is so self serving of the CREA. They could care less about financial burdens and stress.

I loaned my brother & sister-in-law $3,000 (all my money from a summer job before I headed back to school), and my parents loaned them $8,000 towards their down payment. Part of their mortgage was that they received their down payment back - so it's not like that money was really gone, just in holding.
It still took them well over 2 months AFTER they got the money back from the bank to pay us back. And part of it was my parents pushing them, because it was the end of November and I needed that money for Christmas presents.

RRSP are not something that should be touched to give out loans to family members. They should be left to help sustain your retirement, and that's it.

Exactly!!!! I never liked the idea of borrowing from your own RRSP for the down payment on your own house. RRSP's shouldn't be touched till retirement. That is my rule.

[Frugalbigmama]

This is not a good idea......even if your kids end up resenting you, don't do it!!

Yup. Or sister etc. I had an ex and his sister called up the night before she was suppose to close on a house asking us to loan her the down payment. I flat out said NO even though he said "she said she will pay it back" Yeah right. Guess you don't remember the car payment you lent her that she didn't think she should have to pay the wire charge etc (this was all before easy email transfers). I lent money to a friend years ago $3000. She paid it back 10 months later when she got her income tax refund. But never told me when/how she was paying it back. But went on vacation, dinners out etc. Never again!

[super807]

If someone is asking to borrow money for a down payment, it's because they don't have the money, so of course they won't pay it back.

This whole idea is stupid and clearly it's CREA not wanting prices to go down, cause a lower selling price means a lower commission for the real estate agent.

My "favorite" line was the last one of the article: "CREA also asked the government to increase the maximum withdrawal amount by $10,000 to help first-time buyers make larger down payments and take on less debt." - Take on less debt? A bigger down payment means a larger mortgage amount for most "buy as big as you can" folks. A mortgage is debt!

And the money taken out of the RRSP needs to be paid back (over 15 years - used to be 10). So each year, the person who took the money out of the RRSP needs to put at least 1/15 of the amount taken out into a RRSP, and that amount doesn't get tax deferred, cause the tax was deferred the first time they put it in. Kids won't be paying their parents back, and parents who are likely already underfunded for the retirement need to pay it.

Am not a fan of giving adult children money for down payments. All it does is enable them to take on too much debt. They are adults. Being an adult means you are supposed to be financially responsible for yourself. If you can't afford the downpayment, you can't afford the house. end of story

[samm07]

If someone is asking to borrow money for a down payment, it's because they don't have the money, so of course they won't pay it back.

This whole idea is stupid and clearly it's CREA not wanting prices to go down, cause a lower selling price means a lower commission for the real estate agent.

My "favorite" line was the last one of the article: "CREA also asked the government to increase the maximum withdrawal amount by $10,000 to help first-time buyers make larger down payments and take on less debt." - Take on less debt? A bigger down payment means a larger mortgage amount for most "buy as big as you can" folks. A mortgage is debt!

And the money taken out of the RRSP needs to be paid back (over 15 years - used to be 10). So each year, the person who took the money out of the RRSP needs to put at least 1/15 of the amount taken out into a RRSP, and that amount doesn't get tax deferred, cause the tax was deferred the first time they put it in. Kids won't be paying their parents back, and parents who are likely already underfunded for the retirement need to pay it.

Am not a fan of giving adult children money for down payments. All it does is enable them to take on too much debt. They are adults. Being an adult means you are supposed to be financially responsible for yourself. If you can't afford the downpayment, you can't afford the house. end of story

I was with you until the end. Most people CAN easily afford a house. But can't afford to RENT and SAVE for a down payment. We were lucky (well not lucky but...) that my hubby got a small inheritance after his grandma passed away for a down payment or we'd still be at home because we got in RIGHT before the Ontario market went nuts. My brothers (24&26) are still at home because they simply can't afford to get a 20% down payment on a single income, when a crappy small little town house costs $500000 that's $100000! I sure as couldn't save that up while affording our mortgage (rent), food, insurance, cars, etc. most mortgages here are way way way cheaper then renting. But again can't save if you need to pay bills. That generation is stuck. Because they've been failed. We can blame it on entitlement but is not. The differences from my grandparents generation and the life they could build (and did) versus what my brothers can is staggering and sad. And I honestly feel for them. Anyway not to be arguementative lol but my mom and I were just having this convo. My brothers would love nothing more then to get out of the house on their own. They just can't.


Sent from my iPhone using Tapatalk

[MillieH]

People struggling to pay rent and bills will struggle more in a house.. There are always huge expenses that come up.. taxes, new roof, furnace, fencing, landscaping, trees fall down, sewer back ups.. basement flooding from heavy rainfalls, appliances.. they are all things that you don't have to handle when you rent. .. Theres no landlord to call when something breaks down... I don't think owning a house is cheaper than renting..

People also need to understand that interest rates rise.. I remember when interest rates went up past 13% .. mortgage payments went through the roof..

I think its great if people want to help their kids with their down payments but to take it from their RRSPs is a BAD idea and use it a loan is a very bad idea. We give our kids a little money now and again but our RRSPs will have to be pried from our cold dead hands lollllll

[Tweets77]

Totally agree with you @MillieH. My DH and I hope that we have raised our kids to be self sufficient adults. We have given them both educations and they both came out of school without debt. Now they should be able to stand on their own two feet. Of course they will make mistakes, that is how we (usually) learn and we don't agree with all their financial manoevers, but for the most part they are doing well. We had a mortgage all through the 80's when our mortgage rate was 13 1/3%. We made the sacrifices and paid our home off in 12 years. I would not do as the article suggests. We are looking after ourselves and they should be doing the same.

[maggiespice]

One of the biggest financial mistakes that I hope my DS avoids at all cost is Credit Debt. PERIOD.
No, you don't need that computer, that home stereo system, etc, etc, etc.

Now, when it comes to shelter, well, you have to live somewhere, right? It is either rent or your own home. I mean no one wants to live under a bridge.

There is good and bad to both. Yes, you have a lot of responsibility with a home, but personally, I just can't see myself paying rent -paying someone's else's mortgage.

[tjthemanto]

If you have to borrow money to make a down payment, you can't afford the house period !

You can buy a house with just 5 % down payment & 95 % Mortgage. That 5 % as it is is low enough, if you can't even afford that or save 5 % , you have NO business buying that house. Eventually down the road even those 95 % mortgage payments you won't be able to afford & will end up declaring bankruptcy & losing your house.

I personally won't buy a house if I can't make at least 20 % down payment. I will buy a smaller house or a cheaper house, but will make sure that I can come up with at least 20 % down payment from MY OWN SAVINGS , not some borrowed money from parents etc.