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Mortgage vs. savings calculator

Should I pay down my mortgage or contribute to a Registered Retirement Savings Plan (RRSP), Tax Free Savings Account (TFSA) or taxable account?

You may be wondering where your money will benefit you the most – paying down your mortgage or saving and investing available funds.

If you save and invest, you could earn investment income over time until you withdraw your savings and, depending on the type of account, receive income tax refunds that you can reinvest.

If you pay down your mortgage, you’ll have reduced mortgage payments, and you can invest the difference each year in an RRSP, TFSA (subject to applicable limits) or taxable account.

This calculator can help you determine which option may suit you best and learn how an RRSP and TFSA work.

Mortgage and savings information
$


Mortgage
 year(s)

 % per year
Period
 year(s)

 year(s)
Savings
 % per year








 
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Enter the required information and then select Calculate.
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Cash available
This is the amount you are considering putting towards your mortgage or saving it in an investment account.

The calculations do not take into account maximum allowable TFSA contributions, which are $6,000 per calendar year, or maximum allowable RRSP contributions, which depend on your RRSP contribution room. If the amount you entered is in excess of these limits, calculation results may not be accurate for the TFSA or RRSP.
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Amortization
The length of time you expect to be repaying your mortgage will have an impact on your overall investment return, as the loan interest must be considered along with your investment return until the loan is repaid.
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Mortgage interest rate
You’ll need to weigh the interest cost of your mortgage against any tax deduction and potential investment growth.
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Accumulation years
The number of years during which you will be contributing until you begin withdrawals. The number of years will influence how much you can save, and how long you will have to invest your savings.
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Withdrawal years
The number of years during which you will make withdrawals until all invested funds are depleted.
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Assumed rate of return
The assumed rate of return is used to calculate the future value of your balance and the income that you may be able to draw during each year of your retirement. It is a purely hypothetical number used for illustration purposes only.

If you have completed the Asset Allocation tool, consider using the assumed rate of return corresponding to your risk profile:

Conservative: 4.25%
Moderate: 5.00%
Balanced: 5.50%
Growth: 6.00%
Aggressive: 6.25%

To access the Asset Allocation tool, select Tools from the Resource Centre drop-down menu on the Plan Member Services website.
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Investment approach
In addition to your earnings and province of taxation, the calculations consider your investment approach to determine the amount of income tax payable on investment income from RRSP tax refunds invested in a taxable account (e.g. the different tax treatment applicable to interest, dividends and capital gains typical for the investment approach selected for the calculations).

Within the calculation, this provides a general estimate of the taxes payable; you may be responsible for paying more or less in taxes. Consult with your tax advisor for further information.
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Earnings bracket and province of taxation
The calculations considers your income, province of taxation and investment approach to determine the amount of income tax payable on withdrawals from an RRSP, which are subject to income tax, for the comparison with withdrawals from a TFSA, which are tax-free.
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Earnings bracket and province of taxation
The calculations considers your income, province of taxation and investment approach to determine the amount of income tax payable on withdrawals from an RRSP, which are subject to income tax, for the comparison with withdrawals from a TFSA, which are tax-free.