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Feb 1, 2019

Private Mortgages for your RSP’s or Cash Investments


We discussed Private Mortgages for your RRSP's or Cash Investments in Free Coaching Friday.

Most RRSPs are held by a deposit-taking institution that offers a variety of investment options. But in a self-directed RRSP, investors are free to choose other types of investment products, such as debt instruments. “In self-directed mortgages, you can use the money saved in your RRSP to fund mortgages".

For instance, if you had $100,000 in your RRSP, you could convert this investment into cash (this won’t trigger a tax hit) that you can then loan out (known as a non-arm’s length mortgage)—either to yourself, a family member a friend, or a stranger.

How do you do this?

There are strict rules. Any RRSP mortgage must be administered by an approved lender, known as a trustee such as Olympia Trust and the interest rate you charge, along with all loan conditions, must reflect normal commercial lending practices. Olympia Trust company allows up to 100% of the value of the property as a 2nd Mortgage.

To learn more, watch Free Coaching Friday live video on Facebook here.