Why You Shouldn’t Pay Your Home Buyers’ Plan Back Early

Why paying back your Home Buyers’ Plan early may not be the best move.

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When you take the money out of the RRSP, the Home Buyers’ Plan, we’ve discussed this, and you have a chance, you’ve got to pay it back over 15 years. I was saying on an earlier podcast, you don’t want to pay it back early. It’s a little complex to explain briefly, but you’d like to pay it back on that steady pace and not pay it back early

That’s right. I, I had a client once and, and he saw it as a debt, and I said, “Well, it’s a 0% interest debt to yourself, realistically, is, is what it is.” There’s a lot of better use for your money. You can still contribute to an RRSP over what you owe your repayment for your home buyer’s plan and get the tax deduction and let that continue to go for retirement.

But don’t prioritize paying off a zero interest loan if you don’t need to. That money is much better served earning you a tax deduction. So again, it’s the education and, and the awareness of the ramifications of doing that, that I think is often missing.