Modeling FHSA accounts

Welcome to today’s training. In this session, we’ll review how to model a First Home Savings Account, or FHSA, in Voyant and how to use it to help fund a future home purchase.

We’ll begin by creating the FHSA account.

Start by selecting the plus button in the bottom-right corner of the screen and choosing Savings & Investments.

From there, select the Investment section.

Under the Type dropdown menu, choose Tax-Free First Home Savings Account (FHSA).

Next, give the account a name and enter the current account balance.

You’ll also have the ability to adjust fee rates if needed, as well as choose whether the account can be used for non-qualified expenses. In this example, we’ll leave that option turned off.

Next, we’ll move to the Contributions section.

Here, enter how much the client plans to contribute to the FHSA, either monthly or annually.

You also have the option to prioritize FHSA contributions before other expenses are paid by enabling the priority contribution toggle.

After that, enter the planned purchase year for the account and review the account closure options.

When the FHSA closes, any remaining balance can either be liquidated into the client’s cash sweep account or transferred into an existing retirement account already in the plan.

In this example, the client already has an RRSP through their employer, so we’ll direct any remaining FHSA balance into that RRSP.

Once the contributions are entered, Voyant will prompt you to update the timing for those contributions.

This determines how long contributions will continue.

In this example, contributions will begin immediately and continue until the client’s existing First Home Purchase event on the timeline.

We’ll select that as the end event and then click Done to save the account.

Now we can see the FHSA listed under the Savings & Investments section of the plan.

If you’d like to review the projected balances over time, you can go to Year View and navigate to the Investments section to see the end-of-year balances throughout the plan.

Next, let’s model the future home purchase itself.

We’ll click the plus button again and select Property.

First, give the property a name.

We’ll leave the asset type as Principal Residence and enter the estimated future market value of the property.

You can either enter the value in today’s dollars and allow the software to inflate it over time, or select Future Value if you want the property to enter the plan at the exact value entered.

For this example, we’ll leave the market value and purchase value the same.

Next, toggle on Yes, this is a future purchase.

Now we’ll move to the Timing section.

We’ll use the existing First Home Purchase event on the timeline and drag it into the Buy Event field.

The sell event can remain set to Plan End for now.

Next, we’ll review the payment sources.

Under Payment Sources, make sure the FHSA is selected as a preferred funding source for the purchase.

Now we’ll create the future mortgage associated with the property.

Go to Linked Debts and select Create and Link a New Debt.

From here, give the mortgage a name and enter the estimated mortgage balance. This should represent the amount being financed after the down payment.

Then enter the estimated interest rate and expected loan term.

Voyant will automatically estimate the mortgage payment.

Click Done to save the debt, then click Done again to save the property.

Now let’s review the results.

In the year of the future home purchase, you’ll notice a large spike in the cash flow chart. This reflects both the mortgage proceeds entering the plan and the FHSA withdrawal being used toward the purchase.

In this example, $650,000 is flowing into the plan from the future mortgage, while $100,000 is being withdrawn from the FHSA.

We can also review this in more detail within Year View.

Navigate to the year of the home purchase.

Under Cash Flow, you’ll see both the mortgage proceeds and the FHSA withdrawal reflected in the plan.

Under Investments, you can review the FHSA activity, including the $100,000 withdrawal and the remaining end-of-year balance.

Under Property, you’ll see the future property added to the plan beginning in the purchase year.

And under Expenses, you can review the property purchase transaction itself.

If you click into the purchase details, you’ll be able to see the funding sources used for the transaction, including the FHSA being identified as a preferred funding source.

I hope this walkthrough was helpful.

If you have any questions, you can always reach out to the support team at support@planwithvoyant.com.

You can also click your client’s name in the top-right corner of AdviserGo, select Request Support, enter your question, and share client access with the support team.

Thanks for listening!