Should I pay down my mortgage or contribute to my RRSP? Without a crystal ball I can’t answer this question for you. What I can do is detail what happens in each circumstance and hopefully this leads you toward a decision.
You decide to pay down your mortgage. Excellent. Any amount you can prepay goes right to the principal of your mortgage and reduces your overall cost of borrowing and life of the mortgage. Your regularly scheduled payment does not change unless the lender allows this and you approach them to do so. This will also build equity in your home that you could use to draw on at another time or use as an asset in retirement.
Or you decide to contribute to your RRSP. Excellent. I am not licensed to offer tax advice but do have a Personal Financial Planning designation. The basic mechanics of contributing to your RRSP are that your taxable income is reduced by the same amount you have contributed lowering your income tax payable and possibly creating a refund. Your money is now invested with a trusted advisor in a manner that matches your investment profile and goals. This builds an asset to draw from in retirement or earlier if required.
So which is better? That depends on your personal financial plan and goals. Only a team of trusted professionals working together can truly help you determine the right choice. This team includes me as your Mortgage Professional, a Financial Advisor, and a Tax Advisor or Accountant.
Like how I actually haven’t answered the question? That’s exactly the point! Reach out to me and start the process NOW as the deadline is March 1, 2017!