Buying a home is a major investment -frequently the major investment- for a first time home owner. Financing it can be a challenge. Frequently first--time buyers decide to use CMHC insurance to get a conventional, high-ratio mortgage so they do not need to save up as long for the down payment. But CMHC insurance costs thousands of dollars. How can a family member help, without making an outright gift of the much-needed money?

Anyone with a self-directed RRSP or RIF can lend money from the savings plan as a second mortgage. Such a mortgage is just another kind of investment within the investment plan. The money is not taxed as a withdrawal from the savings plan. The lender sets the interest rate and of course the investment is secured by the real estate. During the present investment climate, a guaranteed rate of return may be a lot more attractive than taking a ride on the equities-market roller-coaster.

As you might imagine, this solution can help a first time home buyer save CMHC expenses and provide a relative or close friend with a secured investment.

For further information, see me for a free consultation.

-- Valentine Lovekin, Barrister & Solicitor