[quote user=CurtisSvidal]As a longtime Mortgage Specialist with RBC/Royal Trust I've done quite a few SDRSP/RIF mortgages.
Currently RBC policy is that these can be done as non arms length mortgages, placed on the primary residence of the plan holder or his/her spouse. This product appeals mainly to clients who have or will have a mortgage and who want to hold guaranteed investments in their retirement plan.
The primary advantage is that the RSP/RIF can increase yield by several percentage points over other eligible investments of similar qualify. The psychological factor of paying oneself also appeals to many people. Because these are CHMC/Genworth insured they are guaranteed
To maximize the return to the RSP, plan holders generally pay a high rate...a one year open, today at 6.30%, is a common choice. However the plan holder in his/her role as a borrower must be willing to pay that instead of a "normal" rate of approx 3.25%. Being able to deduct the interest (if the mortgage funds are used to earn income) does mitigate somewhat paying the higher rate.
Disadvantages are the costs to set up/maintain...most costs are upfront, and the mortgage is a large/illiquid investment for the retirement plan.
I hope this helps.
Can this be done in a TFSA as well?
Regards,
Michael