Mortgage Vs RRSP

Picture the scene! I’m at a wedding reception. I’ve just hit the buffet and made it back to my seat with a plate full of delectable favourites. I’m ready to dig into my dinner, and inevitably, the discussion turns to interest rates. A colourful conversation ensues about the benefits of paying off your mortgage quickly versus contributing to your RRSP regularly. Lo and behold, someone there remembers what I do for a living and asks me my opinion, just as I’ve taken a huge bite.

With my mouth full, I sat and pondered as to why we were talking about interest rates and financial priorities at a wedding but realized quickly that it’s a topic constantly on people’s minds, especially in today’s high-interest-rate environment.

The end question was something like, “Should I pay down my mortgage or contribute to my RRSP (or other preferred savings vehicle)?” I love vague questions like this, while I’m stuffing my face with Butter Chicken, but I digress. To me, dear reader, a vague question will get a vague answer, which, essentially, is all a blog can provide.

There are a few key factors we should consider prior to deciding about putting money into savings or using that money to pay down debt.

Question 1 – How old are you? How close are you to retirement?

Question 2 – How large is your mortgage? How much have you put away for your retirement savings already?

Question 3 – What is your annual income and what are your future income expectations?

Question 4 – Do you have any other debts? Consumer debts like Visa cards often carry a significant interest rate, making a 2025 mortgage rate look small in comparison!

Here in the lower mainland, high housing prices have and continue to create larger-than-average mortgage loads for most. This is also an additional level of consideration to keep in mind.

Everybody’s financial situation is unique. It is important to understand how contributing to an RRSP versus paying down your mortgage can affect your overall financial situation. Consider sitting down with a qualified financial professional to help you in your decision making. To a good financial future!