1. The first step is to open a self-directed RRSP account at a trust company that offers arms-length mortgages. Trust companies like Olympia trust, Canadian Western trust, and locally in southern Ontario community trust will allow you to set up these accounts.
2. The lender will need to liquidate their current RRSP assets. This could mean that they will have to pay sales charges and penalties so they want to plan this out carefully. Just be careful that they use the proper forms between the two institutions (Original and Slef-Directed) otherwise they will trigger a bad tax consequence. In particular they should look at using the form T2220 which is a “Transfer from an RRSP or a RRIF to Another RRSP or RRIF on Breakdown of Marriage or Common-law Partnership.”
3.Finally the lender will work with a lawyer in order to register the self directed RRSP funds on title. The lawyer will direct the trust company to release the funds to you, through the lawyer.
4. Payments are then made to the lenders self-directed RRSP account through a pre-authorized payment or according to the schedule that you negotiated with the lender.
A great book on the topic was written by Greg Habstritt titled “The RRSP Secret: Defend and Build Your Wealth With this Powerful Investment Strategy“. If you are serious about using this strategy I suggest you pick up the book.
There are billions of dollars that Canadian’s set aside for RRSPs every year. If you could capture a tiny portion of this market to help you invest in properties you could possibly have an infinite source of financing. The challenge is giving peeople the returns they want, when often you are dealing with a wsmall amount of RRSPs. Go to the Community Trust and Olympia Trust Web Sites – identify all the fees and information that are associated with placing funds inside a self-directed RTRSP account. Add to that $1000 in legal fees to secure the mortgage.
At what amount does it make sense to accept RRSP funds as an Arms-Length mortgage? What are the total fees that you calculated for each company?