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Loans and Credit

Catching up for missed contributions makes sense

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This chart shows the one and 10-year growth potential of two RSP Loan1 amounts at an average annual rate of return of 6%.

As you can see, borrowing $30,000 could create an additional $23,725 after 10 years.

Note: The figures used in this example are for illustrative purposes only. Figures are not intended to represent present or future rates of return. The cost of borrowed funds is not included.

Things to consider

As appealing as using credit may be, there are some factors to consider.

Age. A loan with a five- or 10-year payback period may not make sense if you're close to retiring because the benefits of tax-deferred compound interest are greatly reduced.

Ability to Repay. Don't borrow more than you can repay because it may make it difficult to save for the next year's RSP contribution. You want to be able to pay off your balance and, if possible, begin saving for next year.

Ability to Borrow. An RSP Loan or Line of Credit, like any other use of credit, will increase your debt service ratio, which is the percentage of your monthly income that goes to pay off debts. Lenders rely on this ratio to determine your loan eligibility. Keep your other borrowing needs in mind before you take out an RSP Loan or Line of Credit.

Remember, investing all you can in an RSP makes good financial sense. Check out why --

Maximizing your RSP contribution every year pays off

Visit the RSP Centre for RSP information, investment choices and tools.

1 Subject to meeting TD Canada Trust lending criteria. Using borrowed money to finance the purchase of securities involves greater risk than a purchase using cash resources only. If you borrow money to purchase securities, your responsibility to repay the loan and pay interest as required by its terms remains the same even if the value of the securities purchased declines.

Rates & Numbers

  • TD Prime Rate: 2.95%
    Effective Date July 13, 2017
  • Credit Rates: Please call 1-877-247-2265

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