Question
I already know how to use my RRSP money with the Home Buyer’s Plan to buy my own property. Why do I need to know about RRSP mortgages and your RRSP course?
Answer
There are actually 3 different ways to use RRSP money to invest in property. Each one is used in a different way:
- Home Buyer’s Plan – you borrow from your own RRSP to buy your first home, withdrawals must be repaid over no more than 15 years
- Non-Arms Length Mortgage – you borrow from your own RRSP or that of a family member, money is borrowed in the form of a mortgage and must be insured by CMHC, you must qualify through a bank, as you do with a normal mortgage (CMHC’s guidelines)
- Arms Length Mortgage – you borrow from someone else’s RRSP (must be unrelated), money is borrowed in the form of a mortgage, no insurance or qualification is required
As you can see, each method is quite different. I recommend everyone take advantage of the Home Buyer’s Plan to help buy their first home – it’s a great program.
An Arms Length Mortgage is the most flexible way to use RRSP money, with very few rules compared to Non-Arms Length Mortgages. I teach exactly how to use these types of mortgages in my RRSP Mortgages course.
Founder and Editor at Spirepoint Wealth
Paul is an entrepreneur, investor, speaker, educator and publisher. He is founder and editor at Spirepoint Wealth, a financial education company dedicated to helping people improve their finances, create more cash flow and build long-term wealth.
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Hi,
Is it possible that my friend and I makes a kind of a RRSP exchange? So I can buy a condo with his RRSP and for him, do the samething with my RRSP.
Considering we are in the situation of Arms Length Mortage(unrelated)
Thank you
Hi Patrick,
Yes, you are considered ‘arms length’ from each other, and so technically it’s possible
However, I recommend you find a third person to do it with, just in case CRA questions the motives behind the transactions.
So for example, you loan yours to friend A, friend A loans their to friend B, and friend B loans theirs to you. I hope this makes sense.
You could also try spacing out the transaction so they don’t occur at the same time… wait a few months.
Paul