RRSP or pay down the mortgage calculator
Enter your income, what you can set aside each year, your mortgage and the return you expect. You see which of three plans leaves you in the best position.
Free · no signup Runs in your browser
Should I pay down my mortgage or contribute to an RRSP?
It depends on the mortgage rate against the return you expect on the RRSP, and on your tax rate now compared with your rate when you withdraw. In the example below, an Ontario earner with $90,000 of income, a $350,000 mortgage at 4.5% and $5,000 a year to spare ends $-82,962 against $-57,827 with the RRSP only and $-64,642 with the RRSP and the refund on the mortgage after 15 years, so the best plan is: rrsp only.
Why we built this calculator
The usual rule says: if your mortgage rate is higher than the return you expect, pay down the mortgage; otherwise invest. It leaves out two things. The RRSP comes with a tax refund, which can itself pay down the mortgage, and the RRSP is taxed when you take the money out. This calculator puts all three pieces on the same footing: each plan costs you the same after-tax amount every year, and the result is what you would be worth at the end, with the RRSP counted after tax and the mortgage counted as a debt.
It uses the same tax engine as the RRSP vs TFSA calculator and the RRSP tax refund calculator, and the mortgage side follows Canadian compounding as in the mortgage payment calculator.
It runs in your browser. Nothing you enter is sent anywhere, and there is no sign-up.
When to use it
- Deciding where this year's spare cash should go
- Seeing whether the refund-on-the-mortgage strategy beats either plan alone
- Testing a higher or lower mortgage rate at renewal
- Seeing how your retirement income changes the answer
Mistakes it helps you avoid
- Comparing the mortgage rate with a pre-tax RRSP return and ignoring the tax on withdrawal.
- Forgetting that the refund can be put to work.
- Treating an assumed return as certain when a mortgage saving is close to certain.
- Ignoring that the mortgage rate can change at renewal.
How the three plans are compared
Same after-tax cost each year, compared on net position at the end.
A prepay = the amount goes to the mortgage at the end of each yearB RRSP only = contribution X such that X − refund = the amount (the refund funds part of it); the mortgage runs on its scheduleC RRSP + refund = contribute the amount itself to the RRSP and put each year's refund on the mortgageRRSP after tax = RRSP value − tax on withdrawing it over the chosen years on top of other retirement incomenet position = RRSP after tax − mortgage balance left (A has no RRSP)
The mortgage uses the Canadian convention of a rate compounded semi-annually with monthly payments, and the amortization left is the one you enter. Contributions are made at the start of each year and grow at the return you enter; the mortgage prepayment is made at the end of each year. Tax is worked out with the same 2026 federal and provincial brackets and Ontario surtax as the income tax calculator. The result changes most with the gap between the mortgage rate and the RRSP return, and with your retirement tax rate.
Worked example: Ontario, $90,000 income, $350,000 mortgage at 4.5%
You earn $90,000 in Ontario and can set aside $5,000 of take-home pay each year for 15 years. Your mortgage is $350,000 at 4.5% with 25 years left. An RRSP would earn 5% and you expect $40,000 of other income in retirement, withdrawing over 10 years.
- RRSP only: the contribution that costs $5,000 after its refund$7,107.32 with a $2,107.32 refund
- RRSP and refund: contribute $5,000, refund used on the mortgage each year$1,482.50
- Mortgage balance after 15 years: prepay / RRSP only / RRSP and refund$82,962 / $187,277 / $156,348
- RRSP after 15 years, after tax: RRSP only / RRSP and refund$129,450 / $91,706
- Net position: prepay / RRSP only / RRSP and refund$-82,962 / $-57,827 / $-64,642
The best plan here is rrsp only, $25,135 better than prepaying alone.
With a mortgage at 6.5% the net positions are $-85,373 for prepaying, $-77,817 for the RRSP only and $-79,419 with the refund on the mortgage. With a 3% mortgage and a 7% RRSP return they are $-78,540, $-19,512 and $-35,240.
What decides it
The mortgage plan wins when your mortgage rate is high and the RRSP's tax advantage is small, for example when your tax rate in retirement is close to your rate now. The RRSP plans win when the mortgage rate is low, your return is higher and your tax rate drops in retirement. Putting the refund on the mortgage helps when the mortgage rate is higher than what the RRSP would earn on the same money, and hurts when it is lower, because the RRSP plan then gives up a larger contribution. For an RRSP against a TFSA see the RRSP vs TFSA calculator; if you plan to leave the mortgage, see the break mortgage calculator.
Terms on this page
- Prepayment
- Paying more than the scheduled mortgage payment to reduce the balance faster.
- Net position
- What you would have in the RRSP after tax, less what you still owe on the mortgage.
Common questions
Is it better to pay down the mortgage or invest?
It depends on the mortgage rate against your expected return, after tax, and on how certain each is. A mortgage payment saves interest for sure; an investment return is an assumption.
What does the RRSP refund do here?
In the third plan you contribute the cash itself to the RRSP and the refund prepays the mortgage each year. It beats the RRSP-only plan when the mortgage rate is higher than the RRSP return, and loses to it otherwise.
Why is tax on withdrawal included?
An RRSP is taxed when you take the money out, so its value to you is what is left after tax.
Does the mortgage rate stay the same?
The model assumes it does. At renewal it can change, which changes the answer.
What about a TFSA?
The TFSA is a fourth option, tax free on the way out. Compare it with the RRSP in the RRSP vs TFSA calculator.
Where these numbers come from
- Canada Revenue Agency — Canadian income tax rates for individuals, current year The 2026 federal and provincial brackets, modified June 25, 2026.
- Justice Laws Website — Interest Act, section 6 A mortgage rate calculated yearly or half-yearly.
Last verified 2026-10-25 Rates on this page are checked against the sources above at least once a year, and whenever the governing authority announces a change. Spotted something out of date? Tell us and we will fix it.
Related calculators
RRSP vs TFSA
Compare the same after-tax cost in an RRSP and a TFSA, with the refund, growth and tax on withdrawal worked out on the 2026 brackets.
Open calculatorRRSP tax refund
See how much tax an RRSP contribution saves at your income, province and Ontario's surtax.
Open calculatorMortgage payment
Work out your payment with Canadian compounding, any payment frequency, and the balance when your term ends.
Open calculatorBreak your mortgage
Estimate the prepayment penalty and see whether switching to a lower rate pays back before your term ends.
Open calculatorRESP grant (CESG)
See how much Canada Education Savings Grant you can collect this year and how a catch-up contribution changes it.
Open calculatorFHSA room
See how much First Home Savings Account room you have this year, including carry-forward and the tax you save.
Open calculator🏛️ Registered account calculators
Five calculators for the Canadian accounts where one wrong limit costs real money.
See all 9 calculators in this section