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Going over mortgage basics,  this video explains components of a mortgage while giving tips on what they recommend when choosing between the options. When buyers are making a down payment of less than 20% then they are required to have mortgage insurance. This insurance only protects the lender but could mean lower interest rates for you as it is less risk for the bank. Variable rates are recommended because they will save you money in the long run. When choosing between un-accelerated payments and accelerated payments, choose accelerated and weekly payments are recommended as it makes managing your money a little easier. Always get pre-approved and makes sure it is full underwritten pre-approval. Lastly, work with a mortgage broker and not a bank as the broker has more knowledge of mortgages and the market.

We chose this video as it provided easy-to-digest information for anyone who may be contemplating getting a mortgage. The host in this video did a great job providing insight on what you should consider and what the better options are in most situations. All tips discussed are extremely useful.

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Canada Mortgage: Learn The Basics - MORTGAGE 101 UPDATED FOR 2021

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Welcome to our Padlet wall! Here you'll find information about investing in an RRSP or in a mortgage. We will share our research findings on the pros and cons of each, and everything you need to know before choosing either option.

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Welcome to our board! Here you will find information about the pros and cons of paying off a mortgage vs. investing in an RRSP. This can be a guide to decide which option may be better for you. We do not claim to be professionals and this is strictly the our opinion which we came to after researching with credible sources. We hope you enjoy and find it useful!

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A mortgage is a loan used to purchase a home, land, or other types of real estate. The borrower agrees to pay the lender back over a determined period of time with interest. To secure the loan, the property being purchased with the loan is used as collateral.

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An RRSP is a retirement savings plan that you establish, that we register, and to which you or your spouse or common-law partner contribute. Deductible RRSP contributions can be used to reduce your tax.

Any income you earn in the RRSP is usually exempt from tax as long as the funds remain in the plan; you generally have to pay tax when you receive payments from the plan.
https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/rrsps-related-plans/registered-retirement-savings-plan-rrsp.html

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Video #2: The 4 C's of Lending Mortgages in Canada

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Video #2: The 4 C's of Lending Mortgages in Canada

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This video talks about the four C's banks consider before lending a mortgage to a client. Credit (score), Capacity (how much debt you may have), Capability (ability to pay loan back, your income), Cash (down payment, equity, etc).

We chose this video as we believe it is important information people should look at before considering a mortgage loan. People should focus on lowering their debt, raising their credit score, and proving that they are trustworthy borrowers.

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Canada Mortgage - The 4 'C's of Lending Mortgages in Canada

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Video #3: RRSP Tips and Mistakes to Avoid

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Video #3: RRSP Tips and Mistakes to Avoid

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Tip #1: Deadline for contributing is March 2
Tip #2: Contribution limit is 18% of your previous earned income. The limits caps out around 25-26k.
Tip # 3: Registered pensions affect RRSP room as the RRP and RRSP is combined.
Tip #4: You don't have to cut taxes immediately.
Tip #5: Withholding tax on withdrawals, try to avoid withdrawals.
*Reminder* You do not get the contribution space back

Mistake #1: Not investing within the RRSP (holding cash)
Mistake #2: Withdrawing money too early
Exceptions are Home Buyers Plan and Life-Long Learning Plan.
Mistake #3: Over-contributing to your RRSP. If you do, you pay a penalty of 1% on the excess amount. Everyone does get a 2k cushion though.
Mistake #4: Blowing your tax refund!
Bonus Tip: Reinvest your tax refund!

This video was chosen as it has crucial information on how to have a successful RRSP. It provides tips as well as mistakes to avoid. We liked how the video's host included personal experiences and shared why his decisions may not have been the wisest at the time. As a viewer, you are able to learn from his mistakes and avoid making them yourself.

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RRSP TIPS & MISTAKES TO AVOID | Investing For Beginners In Canada

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Video #4: Can I Use My RRSP To Invest In a Real Estate

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Video #4: Can I Use My RRSP To Invest In a Real Estate

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Yes, you certainly can however, technically you cannot use your own RRSP. There are ways around this, and this video will explain how. One way is lending it to someone. Secondly, you could transfer your funds to a trustee company so no tax events can occur. Trustee companies cannot give advice they are only to hold your funds and do as you say with them.

We found this video interesting as it discusses how you can invest in RRSP and then use it on a mortgage. This video is quick and straight to the point. With this knowledge, it could help you apply your RRSP to invest in a property without breaking any rules and avoid paying more taxes than you need to, saving you more money in the long run.

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Can I Use My RRSP To Invest In Real Estate // Canadian Housing Market

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This image represents "the weight of your potential home's value". Is it worth the price? Can you afford it? Symbolically this picture is perfect in representing all of the research and work you must complete prior to deciding whether or not you can or want to purchase a home.

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Time is ticking, and retirement comes faster than we realize. Have we been preparing enough, long enough? Registered Retirement Saving's Plans (RRSP) are considered when planning for your retirement, but are they the best option?

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 Article #1: Invest in an RRSP or pay off your mortgage?

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 Article #1: Invest in an RRSP or pay off your mortgage?

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This article was taken from Desjardin.com. It is stored under their action plan and tips for savings and investments. The article shares Desjardins opinion about options to manage your money and money decisions in ways that will benefit you most. They believe that it is always best to find a balance between paying your mortgage and contributing to your RRSP because just paying your mortgage would require much discipline to catch up on RRSP contributions and buying a house is eventually essential and you don't want to wait too long to purchase.

We found this article helpful as it explained the perspective well. A balance of both gives you the best of both worlds, you don't have to miss out on either. It gives great advice and is very realistic.

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In a perfect world, paying off your mortgage before contributing to your RRSP would be a good thing to do. But that would call for extreme discipline.

After your last mortgage payment, you would have to keep putting the same monthly amount aside for your retirement. That's not very realistic.

Another possibility is to make substantial contributions to your RRSP before buying a home. However, a home is more than a financial investment; it's a life choice that you don't want to put off for too long. The RRSP that you started early could help make you a homeowner more quickly through the Home Buyers' Plan. Find out how to withdraw from your RRSP without penalty to buy a property.

That's why it's usually best to find a balance between paying your mortgage and contributing to your RRSP, even when RRSP returns are lower than mortgage interest rates.

Why? Because the capital invested in your RRSP will produce compound interest in a tax shelter. In the long run, you'll have a substantial nest egg for your retirement. Furthermore, for those who have nothing to fall back on in the event of illness or unemployment, an RRSP can be used as an emergency fund.

Whether to pay down your mortgage and contribute to an RRSP also depends on your age. If you're not retiring for a while, the compound interest in a tax shelter of the RRSP is more advantageous than a paid off mortgage. If your retirement is around the corner, pay your mortgage more quickly to reduce your budget for the next few years.

Also to be considered, if you are taxed at a high rate, RRSP contributions might be more advantageous than mortgage payments because of the associated tax savings.

To pay off your mortgage more quickly, follow these tips:

Make your payments weekly instead of monthly.

If possible, select a short term. The interest rate is usually lower than for long terms.

Opt for the variable rate, the lowest on the market, and by making higher payments, you'll pay off your mortgage more quickly.

Each year, use the tax return you get from your RRSP contribution to pay down your mortgage.

If you want to contribute to your RRSP but can't seem to pay off all your credit cards, you need to review your financial plan. Start by listing your priorities.

Tools and tips

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Should you pay down your mortgage or contribute to your RRSP? | Desjardins

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In a perfect world, paying off your mortgage before contributing to your RRSP would be a good thing to do. But that would call for extreme discipline. After your last mortgage payment, you would have to keep putting the same monthly amount aside for your retirement. That's not very realistic.

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Article #2: Another opinion- invest in RRSP or pay down mortgage?

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Article #2: Another opinion- invest in RRSP or pay down mortgage?

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The article outlines two options;

1. Pay $1,187 per month in mortgage payments to pay off a $100,000 mortgage in 10 years, then continue to pay $1,187 per month into your RRSP for 15 years, and also invest the tax savings in your RRSP, or;

2. Pay only the required $739 per month on your mortgage, and pay it off over 25 years, and invest the difference of $448 ($1,187 less $739) plus tax savings in an RRSP.

It then outlines the calculated outcomes of each option coming to the conclusion that "You are better to pay off your mortgage first if your mortgage interest rate is equal to or higher than the rate of return on your RRSP.  However, if the rate of return on your RRSP is consistently higher than the mortgage interest rate (can you guarantee this?), you would have more money by paying the lower amount on your mortgage, and investing the difference in an RRSP. "

I really appreciated this article because I found it very comprehensible. In plain terms it shared how you can decide which option is best for you. Gather all your needed information and decide if you should contribute more towards your mortgage for a shorter time or to your RRSP for longer.

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We're assuming that you don't have credit card debt - this should definitely be paid off right away!

You are better to pay off your mortgage first if your mortgage interest rate is equal to or higher than the rate of return on your RRSP. However, if the rate of return on your RRSP is consistently higher than the mortgage interest rate ( can you guarantee this?), you would have more money by paying the lower amount on your mortgage, and investing the difference in an RRSP.

If you pay down the mortgage faster, you have guaranteed savings. If you have or plan to have children, you should try to ensure that the mortgage on your home will be paid off before your children enter university. This will free up funds for their education.

In order to get a better rate of return in your RRSP than the interest rate you are paying on your mortgage, you may have to take on riskier investments, which will not have a guaranteed rate of return. We believe you can make a return of 8 or 9% per year on your RRSPs, but this is not without ups and downs.

TaxTips.ca Resources
Historic Returns on Investments Risk as it Relates to Investing
Save and Invest
RRSP vs Mortgage Calculator
Tip:Unless your RRSP returns are going to be consistently higher than the rate on your mortgage or other loan, it is better to pay down your debt.

See also: What is better - TFSA or RRSP?
Check out all of our ideas for saving money and building wealth!
Tax Tip: Pay down all non-tax-deductible debt with over 8% interest, then see our Save and Invest page.
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TaxTips.ca - Pay Down Mortgage, or Contribute to RRSP?

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TaxTips.ca - Should you pay down your mortgage faster, or contribute to an RRSP?

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This is from the Government of Canada website. It outlines and explains what the Home Buyers Plan is and how you can qualify for it.

I personally think that this is a great option for young people to know about. While you're living at home with your parents you do not have mortgage payments and you probably don't own a home yet. This means that you can be contributing a lot more to your RRSP. After a few years, you can then use the Home Buyers Plan to purchase your first home. Personally, this possibility gives me hope that as long as I continue, I'll eventually have enough to buy a home and that sounds worth it to me.

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The Home Buyers' Plan (HBP) is a program that allows you to withdraw funds from your Registered Retirement Savings Plans (RRSPs) to buy or build a qualifying home for yourself or for a related person with a disability. The HBP allows you to pay back the withdrawn funds within a 15-year period.

You can withdraw funds from more than one RRSP as long as you are the owner of each RRSP account. Your RRSP issuer will not withhold tax on withdrawn amounts of $35,000 or less. Some RRSPs, such as locked-in or group RRSPs, do not allow you to withdraw funds from them.

Certain conditions must be met in order to be eligible to participate in the HBP, including the following:

you must be considered a first-time home buyer

you must have a written agreement to buy or build a qualifying home, either for yourself or for a related person with a disability

you must be a resident of Canada when you withdraw funds from your RRSPs under the HBP and up to the time a qualifying home is bought or built

you must intend to occupy the qualifying home as your principal place of residence within one year after buying or building it. If you buy or build a qualifying home for a related person with a disability, or help a related person with a disability to buy or build a qualifying home, you must intend that the related person with a disability occupies the qualifying home as their principal place of residence

In all cases, if you have previously participated in the HBP, you may be able to do so again if your repayable HBP balance on January 1 st of the year of the withdrawal is zero and you meet all the other HBP eligibility conditions.

Do you meet the HBP eligibility conditions?

Or

To participate in the HBP, you must meet all HBP eligibility conditions that apply to you.

Are you a first-time home buyer?

Unless you are a person with a disability or you are helping a related person with a disability to buy or build a qualifying home, you have to be a first-time home buyer to withdraw funds from your RRSP(s) to buy or build a qualifying home.

You are considered a first-time home buyer if, in the four-year period, you did not occupy a home that you or your current spouse or common-law partner owned.

The four-year period

Begins on January 1st of the fourth year before the year you withdraw the funds.

Ends 31 days before the date you withdraw the funds.

For example, if you withdraw funds on March 31, 2022, the four-year period begins on January 1, 2018 and ends on February 28, 2022.

Breakdown of a Marriage or Common-Law Partnership

Generally, you will not be prevented from participating in the HBP if you do not meet the first-time home buyer requirement, provided that you live separate and apart from your spouse or common-law partner for a period of at least 90 days as a result of a breakdown in your marriage or common-law partnership. You will be able to make a withdrawal under the HBP if you live separate and apart from your spouse or common-law partner at the time of the withdrawal and began to live separate and apart in the year in which the withdrawal is made, or any time in the four preceding years. However, in the case where your principal place of residence is a home owned and occupied by a new spouse or common-law partner, you will not be able to make an HBP withdrawal under these rules.

You will be required to dispose of their previous principal place of residence no later than two years after the end of the year in which the HBP withdrawal is made. The requirement to dispose of the previous principal place of residence will be waived if you buy out the share of the residence owned by your spouse or common-law partner. The existing rule that individuals may not acquire the home more than 30 days before making the HBP withdrawal will also be waived in this circumstance.

Existing HBP rules will otherwise generally apply. For example, your outstanding HBP balance must be nil at the beginning of the year in which you make an HBP withdrawal.

This measure applies to HBP withdrawals made after 2019.

Can you participate in the HBP later?

If you are not considered a first-time buyer now, you may be considered a first-time home buyer later, once the four-year period has passed.

For example, if in 2016 you sold the home you lived in before, you may be able to participate in 2021 or if you sold the home in 2017, you may be able to participate in 2022.

Are you building or buying a qualifying home?

You are considered to buy or build a qualifying home if:

you buy or build it, or you are considered as buying or building it, before October 1st of the year after the year of the withdrawal

you buy or build it, alone or with one or more individuals

We consider you to have built a qualifying home on the date it becomes habitable.

If you do not buy or build the qualifying home before October 1st of the year after the year you withdrew the funds, you can:

A replacement property has to meet the same conditions as a qualifying home. To inform us that you are buying or building a replacement property, send a letter to one of the following addresses:

If your residential address is in Ontario, Prince Edward Island, Newfoundland and Labrador, Yukon, Nunavut, Northwest Territories or in the following cities in the province of Quebec (Montréal, Québec City, Laval, Sherbrooke, Gatineau and Longueuil), send your request to:

Revenue Canada Agency
Sudbury Tax Centre
Pension Workflow Team
Post Office Box 20000, Station A
Sudbury ON P3A 5C1

If your residential address is in Manitoba, Saskatchewan, Alberta, British Columbia, Nova Scotia, New Brunswick or a location in the province of Quebec not listed under the Sudbury Tax Centre, send your request to:

Revenue Canada Agency
Winnipeg Tax Centre
Pension Workflow Team
Post Office Box 14000, Station Main
Winnipeg MB R3C 3M2

Provide your name, address, and social insurance number, as well as the address of the replacement property. You have to say in the letter that you intend to occupy the replacement property as your principal place of residence within one year after you buy or build it.

Extensions for buying or building a qualifying home or replacement property

If you do not buy or build the qualifying home you indicated on Form T1036 (or a replacement property) before October 1st of the year after the year you withdrew the funds, we still consider you to have met the deadline if either of the following situations applies:

You had a written agreement, in effect on October 1st of the year after the year you withdrew the funds, to buy a qualifying home or replacement property, and you buy the property before October 1st of the second year after the year of the withdrawal. In addition, you were a Canadian resident up to the time of the purchase.

You had paid an amount after the date of the first withdrawal and before October 1st of the year after the year you withdrew the funds to the contractors or suppliers (with whom you deal at arm's length) for materials for the home being built, or towards its construction, that was at least equal to the total of all withdrawals under the HBP.

Participating in the HBP for a related person with a disability

Under the HBP, the home must better fit the needs of the disabled person than their current home. You can withdraw funds from your RRSPs under the HBP to buy or build a home, if:

you are a person with a disability

you are buying or building a home for a related person with a disability

you are helping a related person with a disability to buy or build a home

Regardless of the situation, you are responsible for making sure that all applicable HBP conditions are met.

If, at any time during your participation period, a condition is not met, your withdrawal will not be considered eligible and it will have to be included as income on your income tax and benefit return for the year it is received.

Is my Home Buyers' Plan balance up to date?

(If you have never participated in the HBP this section does not apply.)

If you have previously participated in the HBP, you may be able to do so again if:

your HBP balance is zero on January 1st of the year during which you plan on withdrawing funds under the HBP

you meet all the other HBP conditions that apply to your situation

Your HBP balance from your last participation is zero when the total of your yearly designated HBP repayments and any amounts included in your income (because no designated HBP repayment was made as required for a given year) equals the total eligible withdrawals you made from your RRSP under your participation in the HBP.

The RRSP, PRPP, or SPP contributions you make in the first 60 days of a year, and designate as HBP repayments for the previous year reduce your HBP balance for purposes of determining whether your balance is zero on January 1st of the current year. For more information about designating HBP repayments, see repaying your withdrawals.

Do you meet the RRSP withdrawal conditions?

You can withdraw a single amount or make a series of withdrawals in the same calendar year. However, you cannot withdraw more than $35,000.

To withdraw funds from your RRSPs under the HBP, fill out Form T1036, Home Buyers' Plan (HBP) Request to Withdraw Funds from an RRSP. In certain situations, we will consider extensions for buying or building a qualifying home or replacement property.

Your RRSP contributions must remain in the RRSP for at least 90 days before you can withdraw them under the HBP, or they may not be deductible for any year.

Your RRSP deduction may be affected by your participation in the HBP

If you participate in the HBP, certain rules limit the deduction of your RRSP contributions made during the 89-day period before you withdrew the funds under the HBP. Under these rules, you may not be able to deduct part or all of the contributions made during this period for any year.

The following conditions must also be met in order to be eligible to participate in the HBP:

You have to be a resident of Canada at the time of the withdrawal.

You have to receive or be considered to have received, all withdrawals in the same calendar year.

You cannot withdraw more than $35,000.

Only the person who is entitled to receive payments from the RRSP can withdraw funds from an RRSP. You can withdraw funds from more than one RRSP as long as you are the owner of each RRSP. Your RRSP issuer will not withhold tax on withdraw amounts of $35,000 or less.

Normally, you will not be allowed to withdraw funds from a locked-in RRSP or a group RRSP.

Your RRSP contributions must stay in the RRSP for at least 90 days before you can withdraw them under the HBP. If this is not the case, the contributions may not be deductible for any year.

Neither you nor your spouse or common-law partner or the related person with a disability that you buy or build the qualifying home for can own the qualifying home more than 30 days before the withdrawal is made.

You have to buy or build a qualifying home for yourself, for a related person with a disability, or to help a related person with a disability buy or build a qualifying home before October 1st of the year after the year of the withdrawal.

You have to fill out Form T1036, Home Buyers' Plan (HBP) Request to Withdraw Funds from an RRSP for each eligible withdrawal.

To determine the part of the contributions you, your spouse or common-law partner made to an RRSP that are not deductible for any year, you can use this chart to make the calculation.

You are responsible for making sure that all HBP conditions are met. If you make an RRSP withdrawal under the HBP and a condition is not met, your RRSP withdrawal(s) may not be considered eligible. You will have to include part or all of the withdrawal(s) as income on your income tax and benefit return for the year you received the funds. If we have already assessed your income tax and benefit return for that year, we will reassess it to include the withdrawal(s). If you do not meet the conditions to participate in the HBP in the current year, you may be able to participate in future years.

Are you a resident of Canada?

You have to be a resident of Canada when you receive funds from your RRSPs under the HBP and up to the time you buy or build a qualifying home. For more information about residency status, see Residency status or call 1-800-959-8281 (toll free within Canada and the United States), or 613-940-8495 (from outside Canada and the United States). We accept collect calls by automated response. You may hear a beep and experience a normal connection delay.

If you become a non-resident after a qualifying home is bought or built, you cannot cancel your participation in the HBP. However, special rules will apply to the repayment of your HBP balance. For more information, see the HBP participant becomes a non-resident.

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How to participate in the Home Buyers' Plan (HBP)

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The Home Buyers' Plan (HBP) is a program that allows you to withdraw funds from your Registered Retirement Savings Plans (RRSPs) to buy or build a qualifying home for yourself or for a related person with a disability. The HBP allows you to pay back the withdrawn funds within a 15-year period.

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Article #4: What is the most tax efficient option for young homeowners?

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Article #4: What is the most tax efficient option for young homeowners?

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This article expresses the priorities of paying off your mortgage and saving for retirement. They ask "if they can't afford to do both, how should young adults choose between ramping up their monthly mortgage payments and making valuable contributions to a registered retirement savings plan?" It gives a well-described example of why it can be more tax-efficient to delay RRSP payments and pay off your mortgage sooner.

It does only come out to be about a 2% tax break so it comes down to whichever option works best for you. TFSAs are a whole other topic on its own but I want to mention that saving in a TFSA may be a better choice. Investing in an RRSP means that the money cannot be taken out anytime before retirement whereas in a TFSA, the money can be taken out if you need it. It's important to read and research as much as possible about investing in an RRSP and paying down your mortgage. The more information you have, the better you can determine which option is best for you.

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1. What did you learn about your topic that surprised you the most?
What surprised me the most about this topic was how simple it can be to make the decision once you understand what factors are at play. Once you know what the interests rates are for both the mortgage and RRSP, the answer becomes clear.
2. Provide a real-life example of how this topic is relevant or interesting for you.
This topic couldn't have come at a better time for me. I'm lucky to be still living at home so I have the opportunity to contribute a bigger portion of my income to my savings. From the examples I found during my research, I've come to realize that I will soon be in the same position with my OSAP repayments. Once I get closer to graduating, I'll have to determine if I could make and save more money if I pay off my OSAP as soon as possible or if I should make a bigger contribution to my RRSP and TFSA. I'll decide based on the interests rates. If the OSAP repayment interest is low, I will contribute a large percentage of my income to my TFSA and RRSP.
3. If you could pass on your knowledge to a family member or friend, what do you think is the most important thing to pass on?
I believe the most important thing is that they should always do the research before investing their money into anything. There are tons of resources to help you avoid paying more than you need to. Read everything before signing, read the fine print, and ask questions. If they find it overwhelming, seek a professional's assistance because it is not worth the risk nor is it wise to go into investing blindly.