Edmonton Mortgages

How do you put a mortgage into an RRSP? If only I had a dollar for every time I get that question.

There is three ways that I know of, the first is a first time homeowners plan, the second is through a self-directed plan, and the third is through a security.

The first time home owners plan allows you to get a mortgage in your rrsp. The way this works is when you apply with the bank for your mortgage you also apply to get an rrsp mortgage. As long as you are a first time homeowner the government will let you use the funds from your rrsp to pay your down payment. Then over the span of 15 years you pay back your own rrsp. This gives first time homeowners a chance to buy a house without having to save for a down payment. Each year you payback one fifteenth of the amount used from your rrsp. If you miss a year you can make that up next year, but still has to be paid back within 15 years. If not the money will transfer out of the rrsp and be earned income that year. For example you take $30,000 for your down payment. Over the next fifteen years you pay back the full amount at $2,000 per year. This money goes directly back into your rrsp and does not count towards that years income tax. If at the end of 15 years you still have $10,000 to pay back you will have to pay taxes on that amount as if you earned it. I would hope that after fifteen years you could easily get a home equity loan that would pay off the debt. Even in a flat market after 15 years you should have enough equity to do this.

The second way to have a mortgage in rasp’s is through a self directed plan. This is where you can have your rrsp money in the plan, then have someone other than you and anyone at arms length invest the money for you in a real estate property inside of a mortgage.

Get this set up with an institution that allows you to do this. There is getting to be many more out there. Then find an investor that you can invest with. Just about any real estate club in Canada will have investors that are eager to invest your rrsp.

This is a very in-depth topic that takes a lot of knowledge, but as far as the client is concerned the rrsp just needs to be set up in a self directed format.

These are larger very compliant companies that help mortgages in rasp’s. There are many out there, open the newspaper in any city of the country and you will find companies that are bound by laws. These laws regulate what that company does, not meaning your money is more or less safe, just meaning that they have gone through the regulations.

This is just a taste of how you can have a mortgage in an rrsp. There are dozens of courses and books on the topic. Obviously there is only so much you can learn here, but this gives you a taste.

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