RRSP vs. Mortgage calculator

Rates of return can vary among different kinds of investments and investment styles. For the purposes of this tool, the suggested range is 2% – 7%^*.

^*For illustration purposes only;, your rate of return may vary. For example, if you have only stocks in your portfolio, you may see better than 7% return on your investment.

This is the amount of money you have to put towards either your RRSP or your mortgage.

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  Two scenarios are compared to determine savings. In the first, the lump sum is contributed to the RRSP where it grows at the assumed interest rate until the mortgage is paid off. In the second, the lump sum is applied to the mortgage, shortening the payment period. The extra mortgage payments are then contributed to the RRSP annually where they grow at the assumed interest rate until the year the mortgage would have originally been paid off.
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  It’s assumed that there is no penalty for early mortgage repayment.
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  The RRSP contributions assume you will receive a tax refund at the marginal tax rate you selected, and this refund amount will be added to the contribution.
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  The requirement to close or convert your RRSP by the end of the year in which you turn 71 is ignored for the purposes of these calculations.
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  Mortgage payment/interest is applied at the end of the year.
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  RRSP contributions are applied at the beginning of the year.
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  RRSP returns are applied at the beginning of the following year.
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  The results you received from this calculator are for your information only. The figures are not guaranteed, as they are based on assumptions that are certain to change. There is no guarantee of future performance.

Option A: Pay down mortgage then invest savings into your RRSP

If you invest $10,000 towards your mortgage, your amortization period reduces from approximately 20 years to 19 years.

Once your mortgage is paid off, if you then invest that same monthly mortgage payment into your RRSP, it will be worth $32,181.25 by the end of year 20.*

Option B: Contribute to your RRSP

If you invest $10,000 into your RRSP instead, your savings over 20 years will be $41,503.16.*

*Total savings include interest and applicable rebates.

Option A: Pay off your mortgage then take what you had been spending on mortgage payments and save it in your RRSP.

If you put $10,000 towards paying off your mortgage, the length of time it will take you to pay it off shrinks from about 20 years to 19 years.

Once your mortgage is paid off, if you take that same monthly payment and put it into your RRSP, it will be worth $36,739.88 by the end of year 20.*

Option B: Put the money in your RRSP

If you put $10,000 in your RRSP instead of your mortgage, you will have $29,898.65 saved in 20 years.*

*Total savings include interest and applicable rebates.