Now, the next step is to if you and your spouse have an RRSP contribution room, you better contribute this $15,000 into your RRSP. Why? If you contribute it to your and spouse RRSP, then you will get a tax refund of about $4,500 (assume your marginal tax rate is 30%). Simple math, now you have in total $19,500! You could still use your $15,000 for down payment by taking a HBP loan from RRSP and invest another $4,500 tax refund money in TFSA for further growth!
Now the question comes that you have to repay your HBP loan and your monthly mortgage will increase. Let’s see how it works.
First appeal, your repayment period starts the second year after the year when you first withdrew funds from your RRSP(s) for the HBP. For example, if you withdrew funds in 2021, your first year of repayment will be 2023. You are not worried about the first 2 years!
Secondly, you have up to 15 years to repay your RRSP. Therefore, $1,000 per year (15,000/15yrs); $83 per month; $38 bi-weekly! If you even start from the very beginning you may use your grace period of 2 years to reduce your payment like $883 per year ($15,000/17yrs) which make your monthly payment $73 or $34 bi-weekly!
Finally, if your employer has a group RRSP plan (in most cases) then all contributions (you and employer) made to your RRSP will reduce your repayment. You may try another example Here.
If you invest refunded $4,500 under TFSA, it is very likely that it may grow to $15,000 by the end of the 17 years. As a result, at the end of the 17 Years, you have $15,000 under RRSP, $15,000 under TFSA and you already paid your down payment of $15,000!
Happy Retirement!!!
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