Loans

Common Questions

• What are the benefits of an RRSP loan?

  Using a loan to top up your RRSP offers two main advantages: 1) you can make a bigger RRSP contribution, allowing more money to compound for a longer period; and 2) you’ll receive an immediate tax break which can result in a refund that you can use to pay off the loan even faster.

• What are the risks of taking a loan?

  Borrowing to invest has its risk. Since investment returns are not guaranteed, the cost of the loan could potentially be higher than the growth in your RRSP. It’s important to remember that you are responsible for making regular loan payments regardless of how the markets perform. Before borrowing, ensure the monthly payments fit comfortably within your overall financial plan.

• Is an RRSP loan right for me?

  It depends on your unique circumstances, such as your age, tax bracket, and ability to manage debt. An RRSP loan is often most effective when the tax savings and long-term growth outweigh the cost of borrowing. We recommend speaking with an Educators financial advisor to see if this strategy fits your retirement goals.

• Can I pay off the loan early?

  Yes, you can make as many payments, at any time, without any additional charges or penalties. Many members choose to use their tax refund to pay down the principal early, helping them save even more on interest costs.

• What is the difference between an RRSP loan and a Line of Credit?

  An RRSP loan provides a one-time lump sum specifically to maximize your retirement contributions, with a set repayment schedule to help you stay on track. A Line of Credit is a flexible, reusable source of funds that you can tap into whenever you need.