Here is everything you need to know about the TD FHSA in Canada. Find out how you can use this to help first-time home buyers
First-time home buyers in Canada may find it tough to buy a home because of the ongoing housing crisis. Home prices have gone up, and there aren’t enough houses available.
If your clients are struggling to buy their first property, they might want to check if they qualify for the First Home Savings Account (FHSA).
Many banks offer this type of account, including TD Bank. Their FHSA is designed to help clients save for their first home. It allows them to grow their funds without paying taxes, making it easier for first-time buyers to save for a down payment.
In this article, Canadian Mortgage Professional will explain everything you need to know about TD FHSA. We’ll cover how it works and how first-time home buyers can benefit from it. If you want to see if this can help your clients save for their future home’s down payment, read on.
An overview of TD Bank
TD Bank, or Toronto-Dominion Bank, is one of the largest banks in Canada. It was formed in 1955 when two banks, the Bank of Toronto and the Dominion Bank, joined together.
Today, TD Bank has 1,060 branches across Canada and serves over 10 million customers. It offers various financial services, which include:
- savings and chequing accounts
- credit cards
- loans and mortgage products
- investment options
- insurance coverage
TD Bank is also known for its competitive online banking services. Many people use TD’s mobile app to check their accounts, pay bills, and send money.
With a focus on digital banking and customer service, TD Bank continues to grow and provide financial solutions to individuals and businesses.
Aside from the usual banking services, TD Bank is committed to their environmental, social, and governance (ESG) standards through sustainable investing. Watch this video to understand their bank-wide approach to ESG:
What is an FHSA?
The FHSA was announced by the Canadian federal government in 2022. This new program for registered accounts was created mainly to help first-time buyers purchase property. The FHSA has tax benefits and clients can save up to $40,000 as initial deposit for their dream home.
After its implementation, various commercial banks and financial institutions like TD have introduced their own FHSA product line.
One of the key benefits of an FHSA is that contributions made to the account are tax-deductible. It works like a Registered Retirement Savings Plan (RRSP). It reduces clients’ taxable income for the year.
Any investment growth within the account is also tax-free. An FHSA holder’s withdrawals are also non-taxable if they are used to buy a qualifying home. Clients can also hold various types of investments within their FHSAs. These can be:
- guaranteed investment certificates (GICs)
- exchange-traded funds (ETFs)
- mutual funds
- stocks
- bonds
Introduction to TD FHSA
The TD FHSA provides a tax-free way for first-time home buyers to save up for an initial deposit to buy property. By offering tax benefits on contributions and withdrawals for qualified home purchases, it can ease clients’ worries about their finances. In turn, opening a TD FHSA helps make homeownership more attainable for them.
Want to better understand how TD FHSA works? Watch this video:
To know more about the FHSA, its eligibility criteria, rules, and other vital information, check out this guide.
Why should I learn about TD FHSA?
Gaining information about TD FHSA can increase your chances of getting more clients. Prospective leads may perceive you as knowledgeable not just about the mortgage industry but also with regard to the financial sector.
You can also work with financial advisors by referring clients who are interested in TD FHSA:
- provide clients with a background about this savings account, primarily if they are first-time property buyers
- connect them with your partner-advisors if they wish to dig deeper into this new government program
TD FHSA: Requirements
If you have clients who want to open a TD FHSA, refer them to a financial advisor. But first, help them by letting them know about these three qualifications:
- they must be Canadian residents
- they must be at least 18 years old
- they must be first-time home buyers
Key features of TD FHSA
Check out these key features of TD FHSA that your clients can enjoy:
- savings and investment growth are non-taxable
- withdrawals for buying their first home are also tax-free
- yearly contribution limit of $8,000; lifetime limit of $40,000
Unused contribution amounts that are less than $8,000 will be carried forward.
Using TD FHSA for stronger client relationships
As a mortgage broker, you can use the TD FHSA as a tool to create stronger client relationships that might lead to repeat engagements and referrals. Here are several strategies to leverage this savings account service in enhancing client relationships:
- giving general financial advice
- communicating proactively
- applying a holistic approach
- building trust and loyalty
- creating a long-term relationship
Let’s dive in and discuss them one by one:
1. Giving general financial advice
While it is a financial advisor’s role to advise clients about their overall finances, you can still provide a general assessment. Evaluate your clients’ financial situation to determine their eventual mortgage needs.
You can also explain how the TD FHSA can ease the burden of preparing for the initial deposit once they decide to purchase a house. If you can, provide an informal savings plan that aligns with your clients’ timelines, pointing out the advantages of having a TD FHSA.
2. Communicating proactively
If your clients want to open a TD FHSA without the help of a financial advisor, you can set up regular check-ins to guide them. Discuss their savings progress and ask about any changes in their financial situation.
Encourage them to share their experiences and feedback regarding their TD FHSAs. This will let you improve your knowledge about it while also refining your services.
3. Applying a holistic approach
Be holistic and try offering an array of financial products that complement the TD FHSA. Your clients will likely appreciate that you can provide an all-in-one service package.
Always look for cross-selling opportunities. Such creative ways can propel you to the top, especially if you’d like to see your name along with the best mortgage brokers in Canada.
4. Building trust and loyalty
Maintaining transparency will make you a credible mortgage broker. From the get-go, be sure to clearly explain the benefits and limitations of the TD FHSA to your clients.
You can show your commitment to their financial well-being if you don’t withhold critical information. Becoming trustworthy establishes your reputation and increases client loyalty.
5. Creating a long-term relationship
Use the TD FHSA as part of a long-term relationship with your clients. Emphasize that you will provide ongoing support as they transition from saving for initial deposit to securing a home loan.
You can also recommend other first-time home buyer programs in case they want to expand their choices.
How TD FHSA can help you attract clients
As a mortgage broker, you can use what you know about the TD FHSA to get more prospects. Highlight its benefits to show that you sympathize with the needs of first-time home buyers. Make it clear to your leads that the TD FHSA can help them save faster for a down payment.
You can also reach out to potential clients by sharing insightful content. This is best done online through social media posts that talk about the TD FHSA. Another way is by offering consultations to assist clients in learning how this savings account fits into their plans.
By focusing on their specific needs, you can show your work ethic and commitment as a mortgage broker. Finally, consider partnering with financial advisors for joint marketing efforts that promote the TD FHSA. This can lead you to more referrals and a growing client base.
Would you recommend TD FHSA to your clients? Let us know in the comments below.
