How to borrow money from your RRSP without being penalized

August 19, 2019 | Posted by: Cam Brown




There are two ways you can make an early withdrawal from your RRSP without getting dinged – through the Home Buyers’ Plan (HBP) and Lifelong Learning Plan (LLP).

I have assisted many first time home owners who have used their RRSP to buy a home.  Investing in realestate untless you are looking for a quick turnover is another great way to save for your retirement.   It does make sense to use RRSP to get into the housing market.  However tapping into your RRSPs to finance yours or your spouse's education is another good reason.  Both options are outlined below:

The HBP allows you to borrow up to $35,000 from your RRSP ($70,000.00 for couples) to buy or build a home. To take advantage of the HBP you must be a first-time home buyer or haven’t owned a home in the last five years and you must repay the money within 15 years. For more information on the rules surrounding the Home Buyers’ Plan, consult the Canada Revenue Agency.

You can also borrow from your RRSP to finance education for yourself or spouse through the Lifelong Learning Plan. The LLP allows you to borrow up to $10,000 a year, up to a total of $20,000. To participate in the program the student must be enrolled on a full-time basis in a qualified program. You’ll have 10 years to pay back the money without being taxed.

The LLP cannot be used to finance your child’s education. For more on the rules surrounding the Lifelong Learning Plan, consult the Canada Revenue Agency.

If you are considering buying your first home and have RRSP savings, now is a perfect time with interest as low as 2.50%.  Please contact me at 403 650 5509 or to answer any questions you may have.


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