Comments on: Holding your own mortgage inside your RRSP

By: Lenny

Lenny — Thu, 12 Jan 2012 15:47:57 +0000

Hi, I have a question I hope anyone of you can answer to me. I have a Self Directed RRSP with more than 700K, I’ve been lucky investing in stocks for the past few years. I stopped my rrsp contributions to that account when I joined my current employer 3 years ago, with my current job I have a RRSP group plan with a different institution. I do contribute to the group plan and my company matches my contributions up to 6%.

My question is: By holding a mortgage inside my SD-RRSP, and then start paying my mortgage (through contributions). Are those payments consider actual RRSP contributions, that I’d need to report when filing my tax return? What I mean to say is I would like to continue taking advantage of my RRSP group plan and report those as my RRSP contributions.

Many thanks. Sorry for the long posting, and my mistakes.

By: Jayne

Jayne — Wed, 11 Jan 2012 17:54:34 +0000

As per above, its my understanding you can’t old “vacant” land in your RRSP as I would like to do as they are suggesting. Only “arms-length” transactions qualify for vacant land. Could you clarify this…very important to me as could lose the land for lack of financing otherwise.
Thank you,

By: Hudson

Hudson — Tue, 03 Jan 2012 07:49:03 +0000

Preet

Heres my situation.

Looking to purchase a our first house.

Purchase Price $550K

My Current assets
RRSP $350K getting 4.5% return mostly strip bonds
Cash $100K

Heres the kicker…
Owner will finance property for 5 years at 4% with 125k down we can do for 20-25years.

Would you still set up a RRSP Mortgage or take the Vendor Take Back Mortgage?

Im 37 years old.

Thank you very much. Enjoyed learning from this page.

Hudson

By: Preet

Preet — Mon, 12 Dec 2011 18:21:57 +0000

Hi Sheng – not sure. You may want to check with a cross border specialist.

By: Sheng

Sheng — Sat, 10 Dec 2011 04:46:18 +0000

Hi, I’m wondering if I could get RRSP mortgage for my rental property in the States? Thanks.

By: Preet

Preet — Tue, 06 Dec 2011 07:23:33 +0000

1 = Yes
2 = You, so long as the mortgage trustee is okay with it
3 = Find a financial institution who is used to executing this strategy for more help. They will normally have a brochure or other materials. I know B2B offers it. Last time I checked Scotia’s fee schedules, they had a line about holding a self-directed RRSP mortgage in the fee booklet, too.

By: Rod

Rod — Mon, 05 Dec 2011 08:10:49 +0000

I am planning to purchase a land for a future country home, I want to use $70,000 of my RRSP to mortgage 60% of the land’s value, while I pay the other 40% cash.

1- do I need to take an insurance?
2- who determine the amortization period.
3- how to go about doing this?

By: Preet

Preet — Tue, 29 Nov 2011 06:23:39 +0000

For an open mortgage, just make sure that is in the paperwork when speaking to the mortgage administrator.

By: Mark

Mark — Tue, 29 Nov 2011 02:48:30 +0000

I too have been contemplating this strategy for a long time. I believe the question comes down to how one sees the Expected Costs of Borrowing Vs. Expected Returns from the Market.

Until very recently I found if very easy to conclude that Expected Market Returns should easily exceed what are historically low borrowing rates. My Long Run Portfolio returns suggest otherwise. Furthermore I see very little evidence that suggests that the next 10 years of Market Returns are going to be significantly different than the last 10 years.

Re: Whether the mortgage can be “Open”…. yes…. so you can always wind up the strategy by paying off your mortgage.

By: Denis Charron

Denis Charron — Wed, 23 Nov 2011 20:40:00 +0000

When I look at the rate of return that I get on my RRSP these days….oops, I mean of “sometimes little returns”, I think I would be very happy in knowing that I could get a consistent 3% – 4% return. I would have to give it to my bank anyways, so why not give it to myself.
It would mean using the whole of my RRSP.
I know that I would be loosing the possibility that the RRSP could grow much faster if the markets would come back to the 7 – 10% returns of days gone by…..but I find myself unable to believe in those kinds of returns coming back for quite some time(given the market turmoil that is sure to continue for many years thanks to the long term debt problems that europe is facing)
QUESTION : Can the mortgage be “open”?….if I sell the house I want to pay it off early.