How to Use an RRSP Loan Effectively
Step-by-step guide to the RRSP Loan Calculator: what each field means, how to interpret results, and when an RRSP loan makes sense. Learn the gross-up strategy and best practices.
Estimated time: 1-2 hours to plan, 5-10 business days for loan approval
Photo by PiggyBank on Unsplash
Select your province
Your province or territory of residence is used to estimate your marginal tax rate. Tax rates vary by province, so this directly affects your estimated tax refund and whether the loan math works in your favour.
Enter your annual taxable income
Use your expected or actual annual employment income (before deductions). This is the amount used to determine which tax bracket you are in and thus your marginal tax rate. Do not include non-taxable income.
Enter your RRSP contribution room
This is the amount you are allowed to contribute to your RRSP. You can find it on your CRA Notice of Assessment or in My Account. The calculator does not enforce this limit; it is for your reference so you don't plan to borrow more than you can contribute.
Enter the amount you have already saved
This is the cash you have on hand to contribute to your RRSP now. Your total contribution in the calculator will be this amount plus the loan amount. It is also used for the gross-up strategy: the tool suggests an 'optimal contribution' based on this cash and your tax rate.
Enter the potential loan amount
The amount you are considering borrowing (between $1,000 and $50,000). The calculator will show the monthly payment, total interest cost, and whether the tax refund exceeds the interest cost (net benefit).
Enter the loan interest rate
Use the annual interest rate (as a percentage) offered by your bank or lender for an RRSP loan. Typical rates are around 5.5% to 6.5%. Even a small difference in rate can change the net benefit significantly.
Enter the repayment period in months
How long you plan to take to repay the loan (e.g. 12 for one year). Shorter terms mean less interest but higher monthly payments. We recommend 12 months or less so that your tax refund can pay down most or all of the loan quickly.
Enter your expected annual investment return
The average annual return you expect from your RRSP investments (e.g. 5% to 7% for a balanced portfolio). This is used in the recommendation: if your return is lower than the loan rate, the net benefit of borrowing is reduced.
Enter high-interest debt and monthly debt
If you have credit card or payday loan debt (e.g. over 15% interest), enter the balance. If it is over $5,000, the calculator will recommend against an RRSP loan until you pay that down. Monthly debt is your total monthly debt obligations; it helps you consider affordability.
Read the financial summary and gross-up section
The summary shows your marginal tax rate, estimated tax refund, loan interest cost, net benefit (refund minus interest), and monthly payment. The gross-up section shows an 'optimal contribution' and how much to borrow so that your refund roughly pays off the loan in 2–3 months.
Follow the recommendation
The tool gives one of: Good Opportunity, Modest Benefit, Proceed With Caution, or Not Recommended. Use it as a starting point—not as financial advice. Verify contribution room with your Notice of Assessment and speak to a financial advisor before borrowing.
Compare loan rates and apply refund to the loan
Shop for the best RRSP loan rate from multiple lenders. When you receive your tax refund, apply it to the loan principal immediately to minimize interest. See our blog <a href='/blog/rrsp-loan-decision-guide-2026'>Should You Take an RRSP Loan?</a> for real scenarios and the gross-up strategy in detail.