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Four reasons why you might not want to tap your RRSPs to become mortgage-free.
Is it a good idea to pay off my mortgage with my RRSP money and then put what my mortgage payment was back into the RRSP once I’ve paid it off? What are the pros and cons of this strategy to being mortgage free?
–Mike
Paying off your mortgage with your registered retirement savings plan (RRSP) and then putting what your mortgage amounts would have been back into the RRSP may not be a good strategy for several reasons.
A comprehensive guide for Canadians
A better strategy to pay down your mortgage is to accelerate the payments by an additional—and affordable—amount, which is applied directly to the principal. That has the effect of reducing the amortization period, even if it means reducing or forgoing RRSP contributions. Speak to your mortgage lender or use a mortgage calculator to estimate the results of accelerated additional payments in your particular case.
Our calculator will help you understand what a mortgage will cost you in real terms while factoring for interest rates, amortization period, fixed or variable terms, and more.
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