RRSP loans and lines of credit

Example :

If you're taxed at 40% and you contribute $3,000 to an RRSP, your income tax return will be $1,200 (3,000 x 40% = 1,200).

If you're taxed at 40% and you borrow $2,000 to add to your initial RRSP contribution of $3,000, you'll get $2,000 back (5,000 x 40% = 2,000).

So your income tax return repays the entire loan, and you've saved $5,000 instead of $3,000 for your retirement.

Take out an RRSP loan or line of credit* and take advantage of the Home Buyers' Plan (HBP) to buy your first home, or the Lifelong Learning Plan (LLP) to go back to school.

Here's how:

1. Take out an RRSP loan or line of credit.
2. Put the money you borrowed in your RRSP (up to your contribution limit) and keep it there for 90 days. Interest charges may apply.
3. Withdraw the amount you need from your RRSP. Note that you will need to pay back your loan in full when you make this withdrawal.
4. Get a tax refund for contributing to your RRSP and put it toward your Down payment or use it to finance your studies.
5. Note that you have up to 15 years to pay back any funds you withdraw from your RRSP under the HBP, and up to 10 years to pay back funds withdrawn under the LLP.
   

*Subject to credit approval by National Bank. Speak with your accountant, tax specialist or financial planner to see if this is the right strategy for you.

Rates are subject to change without notice.