Registered Funds Are an Alternative Mortgages Goldmine.

This Canadian real estate investing video is an edited recording of a live webinar for participants in Barry McGuire’s Rapid Cash Program. The topic is how to use the funds in a registered investment (e.g., RRSP, RESP, TFSA, etc.) as an alternative source for a mortgage. Whether you want to be a lender or a borrower, there is lots of money out there—if you know how to find and use it! This video provides in-depth discussion from experienced registered fund lenders and borrowers.

For a legal perspective on registered fund mortgages, view this recent blog post.

Everyone in Canada has probably heard about RRSPs (Registered Retirement Savings Plans). They are just one example of ‘registered funds,’ which are tax-favourable environments where account holders can accumulate investments. Other registered funds with the same borrowing rules are, LIRAs (Locked In Retirement Accounts), RIFs (Registered Income Funds), and RESPs (Registered Education Savings Plans). What is less well known is that other people can borrow money from registered fund holders.

Canadians have literally billions of dollars in registered funds with RRSPs being most familiar. Fund holders, that is, the people who have these registered accounts, are allowed to lend money from their fund/account if it is secured by a mortgage. Such a loan is—and must be—a ‘qualified investment’ as defined by the CRA (Canada Revenue Agency).  Many fund holders are interested in getting better returns than they are currently obtaining from their other investments, such as mutual funds.  Many investors are, especially in these times of much tougher financing rules, interested in borrowing for individual projects from what they see as more reasonable lenders and at reasonable interest rates compared to private hard money lenders.

Registered fund mortgages are flexible. Yes, you have to stay within the rules as set up by the trustee. In my Alberta real estate law practice, I find that Olympia Trust out of Calgary is the most commonly used trustee. But, those rules are not onerous; they leave the fund holder and the borrower free to negotiate their own terms.  If one fund holder doesn’t have sufficient funds for a borrower’s requirements, other fund holders can also join and collectively put together what is sometimes referred to as a ‘syndicated mortgage.’

Overall, registered fund mortgages are a great thing to know about and understand! They are just one strategy in Barry McGuire’s Rapid Cash Program and Focus Workshops. Sign up for the newsletter to find out about upcoming events.