THE 5C’s FOR CLIENTS TO CONSIDER BEFORE ASSUMING AN RRSP LOAN
When you are considering an RRSP loan, you can use these five measures to help decide whether or not this strategy would be viable for your retirement savings.
- Capacity The estimated amount of debt you can carry. This is determined by a mathematical calculation known as your Total Debt Service Ratio (TDSR).
- Capital The measure of your net worth. This demonstrates the ability to manage your finances and accumulated assets while repaying debt obligations.
- Collateral Can your assets back up your debt?
- Credit History What is your current debt and how have you managed your debt in the past?
- Character What is your repayment history and are you responsible enough to stick to a repayment schedule?