Borrowing money for an RRSP is an individual decision and needs the advice of a financial planner!
Walton Financial Group in Barrie, Ontario has advice about borrowing money to invest in an RRSP
RRSP loans are generally at bank prime. Most banks will lend up to $50,000 with an amortization, or repayment period, of one to 10 years. The first payment is usually deferred by 90 days so that an RRSP loan taken in February before the RRSP deadline can generate a tax refund in April that you can use to pay down some of the loan.
Borrowing at prime is a good interest rate. To put that into perspective, many secured lines of credit backed by your home’s value are at prime plus 0.5%. However, banks can offer a low RRSP loan rate because those loans allow them to make money twice: on the interest they charge you, and on the fees they collect on your RRSP investments.
Who should consider a loan for an RRSP? Anyone who wants to make an RRSP contribution for 2024 in the first 60 days of this year, has less cash on hand than they’d like to contribute and has sufficient RRSP contribution room.
Deciding to take out an RRSP loan to boost your contribution is not a black-and-white decision. A financial planner at Walton Financial Group can help you decide. Call today to set up an appointment.
