The BENEFITS for YOU, the INVESTOR
An Arm’s Length Mortgage provides many excellent benefits for the person interested in turning their RRSP money into one or more mortgages, such as:
- Offers a Consistent, Predictable Return on Investment Regardless of the fluctuations in the market and the status of the world economy, you know your investment will earn you X% of interest over Y number of months or years.
- Simplified Retirement Planning You know precisely HOW MUCH money will be added to your RRSP account (unlike floating interest rates or dividends or sales from stocks) and WHEN money will be added to your RRSP account.
- High Return You typically get a much higher return on investment than you currently receive with other investment vehicles.
- Pre-Defined Investment Terms You know precisely when your investment money is no longer being used for a mortgage and is returned to your account.
- You Have Full Control You, the Investor, have full control over which mortgage you want to invest in (unlike mutual funds).
- Secured by Real Estate Your investment is secured by REAL estate… unlike money invested paper assets like (Mutual Funds, GICs, Stocks, etc).
- No Time Required After spending a bit of time to set up the process, you won’t need to spend time on this since the trustee, lawyer and borrower do ALL the work.
- No Special Expertise Required No expertise required on your part (the borrower uses a team of professionals: lawyer, realtor, accountant), and the trustee is well-experienced in this type of transaction.
- Contribution Limits are NOT Affected The repayments back into your RRSP do not affect your contribution limits for the year—the money is simply being returned to you—along with the interest.
- Wash, Rinse and REPEAT Best of all, when the invested money is returned to your RRSP, you have full control over what you want to invest the money in again—either another mortgage, or conventional instruments such as GIC’s bonds, stock or mutual funds.
The FEATURES for YOU, the INVESTOR
- This investment strategy is fully approved by the Canada Revenue Agency.
- There are no set-up fees for you, the lender (when over $25,000 is invested).
- The whole process takes place under the RRSP umbrella and profits remain tax sheltered.
- You, the Investor, do not pay tax on the interest you receive because interest is accrued inside of your registered account.
- This process is supervised and administered by a trust company:
TD WaterhouseOlympia Trust (acts as the trustee).
- FYI, the certified cheque to purchase a property (using your RRSP money) goes to the trustee first, then to the real estate investor’s lawyer, then to the seller of the property. The mortgage payments are made through the trustee, directly into YOUR RRSP account, pulling the money directly from the real estate investor’s bank account—you don’t have to collect the payments yourself, this is all arranged for you.
- To protect your privacy, the trustee’s name appears on the title of the property as the mortgage holder.
- The trustee sends you, the account holder (the Investor), a printed monthly statement (
TD WaterhouseOlympia Trust), as well as access to an online statement.
- All the documentation is prepared by a reputable law firm.
- The terms of the mortgage can be very flexible. You (as the Investor) act as the ‘bank’ and as long as YOU are happy with the repayment arrangements that’s all that matters—there’s no 3rd party who will approve or disapprove the deal. It’s all up to you — YOU decide how, when and to whom you want to lend your money. YOU ARE IN COMPLETE CONTROL!
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