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Orginally posted by desi in ottawa

Just wondering if I can borrow money from/on my RRSP. Is the interest rate same as the mortgage?
Any suggestions?

DIO

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I know of atleast 2 purposes for which you could borrow money from your RRSP
1. Buying your 1st house
2. Higher Education
Each has it's fine print and conditions. It's treated like a borrowal from your RRSP, no interest is charged but you have to repay the $$ within the stipulated timeframe.

OTOH you may simply withdraw $$ from your RRSP. In that case you'll be taxed heavily, almost to the tune of 40%.

Hope this helps.

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Orginally posted by desi in ottawa

Just wondering if I can borrow money from/on my RRSP. Is the interest rate same as the mortgage?
Any suggestions?

DIO

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The RRSP is meant for your retirement and the government encourages you to save for your future (as the government knows that there would not be enough money to pay you pensions from government funds) and hence you get a 'tax break' when you put money in RRSP. Further your money grows 'tax sheltered' in RRSP, however, all the income and growth and principal is taxed at your 'marginal rate' when you withdraw money from the plan and the banks 'withhold tax amount' at prescribed rate and all the withdrawl is added to your income for tax purposes.

However, in order to encourage Canadians ( first time home buyers) to go for their own housing ( under HOME BUYER PLAN) or for higher learning (under LIFE LONG LEARNING PLAN) the government allows you to withdraw money from RRSP without paying any withholding tax or added to your income in the year of withdrawl. There are certain conditions and qualifying criterias for the same and you have to put the money back in your RRSPs in future subject to a minimum amount per year.

Further information regarding HOME BUYER PLAN OR LIFELONG LEARNING PLAN can be found at Canada Revune Agency website at www.ccra.ca