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RRSP LOAN PROGRAMS

Many people lack enough money to maximize their RRSP contributions to their registered savings portfolios. An RRSP Loan or RRSP Line of Credit can provide them with the capital they need to keep the maximum amount invested in their registered portfolios so it may grow large enough to provide a retirement income. Variable rates may vary between prime plus 0.5% to prime plus 3.00 % (depending on the loan amortization period). These programs are available from different financial institutions, call at 416-493-0101, 1-877-443-0101 for more information, to open RRSP and get a loan.

Features and Advantages

• You maximize your retirement savings immediately;

• You receive a higher tax refund, which may be used to pay off part of your RRSP;

• You benefit from your unused contributions;

• You reach your savings objectives more quickly;

• You increase your retirement income.

Example of RRSP Loan program.

RRSP Loan Rates

Amortization period is a period of time when you gradually pay out the loan.

The Prime Rate is the rate that banks give to their best and most credit-worthy customers. The rate fluctuates with the Bank of Canada decision to raise or lower short-term lending rates.

You may chose variable or fixed interest rate.

There are no set-up or transaction fees on loan account.

Deferral Payment Option: up to 180 days

You can defer your first monthly payment for 180 days from the date the loan was funded. Interest accrues from the date of the loan funding, but amortization starts at the end of the deferral period.

RRSP Loan Payments

Blended monthly payments of principal and interest are withdrawn on the payment date.

Applicants may choose to have payments automatically withdrawn from their bank account on any date between the 1st and the 28th of the month. The first payment is due on the first payment date following the advance of the RRSP loan.  If a deferral payment option is selected, the first payment is due on the first payment date after the expiration of the deferral period.

For example, if the applicant  chooses a payment date of the 15lh and the RRSP loan is advanced on January 10th,  the first payment will be due on February 15th. Or, if the applicant chooses a six-month deferred payment option, the first payment will be due on August 15lh.

Lump sum principal repayments can be made at any time without penalty.

Example.

Suppose you decided to take an RRSP loan with variable rate for investing $7,000 in your RRSP. Prime rate offered by many banks in January 2011  is 3.00%.  If you choose one-year amortization period you have to pay $594.44 monthly. For two-year repayment period monthly payment will be $302.40. Interest rate used in these calculations was 3.50%. The interest rate applicable to the loan and associated borrowing costs will vary with fluctuations in Prime Rate. (Note: The example presented is for illustration purposes. The payment amount will vary based on loan amount, interest rate, deferral period and loan type selected)

If you have questions or need more information please call Natalia at 416-493-0101, 1-877-443-0101.