Let ’ s have a conversation !
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Arm ’ s Length Mortgages
– By Glynis Van Steen
Did you know your RRSP can help fund someone else ’ s real estate purchase ( maybe even a family member ’ s )… while making you money ?
An Arm ’ s Length mortgage is a mortgage that is held within an individual ’ s RRSP . They are very popular in Western Canada , because they are safe , and can even earn you around 8 % per year .
Why haven ’ t you heard about this ? Chances are that you haven ’ t heard about this option because financial regulations in Ontario state that financial advisors who are not licensed to deal in mortgages ( ie : not licensed mortgage agents or brokers ) are not allowed to discuss them ! The big banks are not interested in these products either , so this option is not openly shared .
With an arm ’ s length mortgage , you can replace existing investments held in your RRSP ’ s , RRIF ’ s , TFSA ’ s , LIRA ’ s , and convert them into mortgages – without any tax implications .
Canada Revenue Agency advises that mortgages on real property located in Canada are considered qualified investments that can be held inside registered accounts . You can invest in 1st , 2nd , or 3rd mortgages up to 90 % of the loan / value of residential , commercial or industrial property on Canada .
You can also invest in either Arm ’ s Length or Non-Arm ’ s Length mortgages . Arm ’ s Length Mortgages are mortgages for individuals or companies that are NOT related to you . Non- Arm ’ s Length mortgages are mortgages given to yourself or to people deemed related to you , like a child or a sibling . Non Arm ’ s Length transactions do require CMHC involvement , so it truly is not a financially attractive investment because of the costs involved – plus , financial institutions these days are reluctant to act as trustees for NON Arm ’ s Length transactions .
What ’ s in it for you ?
• You have an experienced group of professionals guiding you through the process
• You earn a contracted fixed interest income and it can be tax sheltered
• You obtain defined short term contracts
• Your principal investment is registered on title in your name
• Your capital is protected by the value of the property
• It ’ s a great way to diversify your investment portfolio and convert lower rates of return into higher paying investments
• Fees incurred to set up these types of investments are paid by the borrower , not by you , the investor , so there are no legal fees , broker fees , Management Expense Ratio fees ( which includes annual management fees and HST ) all which erode your rate of return .
it ’ s spring !
TIME to
Revisit Your Mortgage Needs .
Let ’ s have a conversation !
Glynis Van Steen
Mortgage Broker , Certified Reverse Mortgage Specialist Centum Total Mortgage Services Inc .
License # 10646
647-296-0011 www . centum . ca / glynis _ vansteen
I have known about this type of investing since the mid 1980 ’ s when I was introduced to them in my former banking career , and while you can set up Arm ’ s Length programs on your own , there are many complex details that need to be attended to . It ’ s highly recommended that you align yourself with a trusted mortgage professional , along with a lawyer that specializes in real estate and has “ hands on ” experience with these products .•
Glynis Van Steen is a licensed Mortgage Broker and Certified Reverse Mortgage Specialist . 647 296 0011 www . centum . ca / glynis _ vansteen
The Disability Tax Credit can provide refunds , access to other government programs , and income tax reductions .
We can help you determine if you qualify , then guide you step-by-step .
1-519-265-3145
www . dtresults . ca dwilson @ dtresults . ca
Silver & Gold Magazine ~ Spring 2017
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