Why would you want to invest in mortgages with your RRSP (or registered account) money?
1. The investment is secured against a real asset,
2. When lending to others, you can decide the interest rate you want to charge to others,
3. Low management fee compared to mutual funds,
4. It is a more stable investment, compared to stocks for example,
5. You earn more consistent, predictable returns,
6. Depending on the registered vehicle you are holding the mortgage in: the taxes on your 'pre-tax' dollars are either deferred (RRSP) or inexistent: you don't pay any taxes on your 'after-tax' dollars (TFSA),
7. Have the investor pay all the set up and maintenance fees for you! The investor, if they come to you, will be motivated and won't mind paying those fees.
Taxes on interest income:
Source: "How Investment Income is Taxed", BMO Nesbitt Burns
Comparison of the institutions known for providing RRSP Mortgages
Exit strategies:
1. Once the investor has built up enough equity, they can refinance with a financial institution,
2. You can sell your mortgage,
3. They sell the property and you receive your money back.
1. The investment is secured against a real asset,
2. When lending to others, you can decide the interest rate you want to charge to others,
3. Low management fee compared to mutual funds,
4. It is a more stable investment, compared to stocks for example,
5. You earn more consistent, predictable returns,
6. Depending on the registered vehicle you are holding the mortgage in: the taxes on your 'pre-tax' dollars are either deferred (RRSP) or inexistent: you don't pay any taxes on your 'after-tax' dollars (TFSA),
7. Have the investor pay all the set up and maintenance fees for you! The investor, if they come to you, will be motivated and won't mind paying those fees.
Taxes on interest income:
Source: "How Investment Income is Taxed", BMO Nesbitt Burns
Comparison of the institutions known for providing RRSP Mortgages
Exit strategies:
1. Once the investor has built up enough equity, they can refinance with a financial institution,
2. You can sell your mortgage,
3. They sell the property and you receive your money back.
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