Difference Between Home Buyer’s Plan and RRSP Mortgages

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:

1. 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
2. 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)
3. 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.