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Should I cash my RRSP to pay off my mortgage?
– moneysense.ca
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
Pay off a mortgage or keep investing with RRSPs?
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.
If you withdraw any money from your RRSP, it is taxed as income. There is withholding tax on the withdrawal initially, but the total tax depends on your other sources of income for the year when you file your tax return.
If you withdraw from an RRSP, you do not recapture that initial RRSP contribution room and you may not be able to re-contribute the same amount back to the RRSP unless you have sufficient current room. This means you will forgo years of compounded returns on the money you have withdrawn, and it can never be made up…
