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I heard that you can use the RRSP of someone else as a downpayment for a property. I am wondering if anyone has heard about that, and if so, how does it work exactly, what is your experience with it?
Using a friend`s RRSP for real estate investment?
- Thread starter louiselec2000
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I haven`t heard of using someone elses RRSP as a down payment. It could be used for a second mortgage though behind a conventional mortgage from a regular mortgage lender. But be careful all lenders won`t allow that.
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QUOTE (MikeMcCrae @ Jul 7 2009, 12:14 PM) I haven`t heard of using someone elses RRSP as a down payment. It could be used for a second mortgage though behind a conventional mortgage from a regular mortgage lender. But be careful all lenders won`t allow that.
I am not totally sure how it works exactly either. Someone told me that there are banks that offer this service, and it is like a second mortgage. I thought that some seasoned investors might know a bit more about this....
I am not totally sure how it works exactly either. Someone told me that there are banks that offer this service, and it is like a second mortgage. I thought that some seasoned investors might know a bit more about this....
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QUOTE (louiselec2000 @ Jul 7 2009, 03:54 PM) I am not totally sure how it works exactly either. Someone told me that there are banks that offer this service, and it is like a second mortgage. I thought that some seasoned investors might know a bit more about this....
Although I could be wrong, I haven`t heard of it being used to replace the downpayment, but rather to reduce the amount of downpayment needed. Meaning, if you`re getting a house for $100 000, you can go with a first mortgage of $80 000 and a $20 000 downpayment, or a first of $80 000, a second (RRSP) mortgage of $10 000, and a downpayment of $10 000.
Now, I believe in the past, you could go with an LTV of 100%, so you could do $80 000 first mortgage, and $20 000 second, thereby eliminating the need for a regular downpayment. However, I thought that all, or at least most of, the banks had eliminated that option. Even if it does exist, it is definitely not normally recommended. I think most seasoned investors recommend an LTV of no higher than 90%, or possibly 95%.
I`m sure that more experienced investors will chime in about this though.
Have a good one!
JohnS
Although I could be wrong, I haven`t heard of it being used to replace the downpayment, but rather to reduce the amount of downpayment needed. Meaning, if you`re getting a house for $100 000, you can go with a first mortgage of $80 000 and a $20 000 downpayment, or a first of $80 000, a second (RRSP) mortgage of $10 000, and a downpayment of $10 000.
Now, I believe in the past, you could go with an LTV of 100%, so you could do $80 000 first mortgage, and $20 000 second, thereby eliminating the need for a regular downpayment. However, I thought that all, or at least most of, the banks had eliminated that option. Even if it does exist, it is definitely not normally recommended. I think most seasoned investors recommend an LTV of no higher than 90%, or possibly 95%.
I`m sure that more experienced investors will chime in about this though.
Have a good one!
JohnS
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QUOTE (louiselec2000 @ Jul 7 2009, 06:19 AM) I heard that you can use the RRSP of someone else as a downpayment for a property. ..
you canNOT .. you can add it as a second mortgage after you close though .. to flush out your own cash to close .. so you buy a 160K house with 20% down .. i.e. 32K .. then add a 30K 2nd later to pay you back the 30K ..
OlympiaTrust is on firm that does it .. as the RRSP trustee has to approve the 2nd mortgage ..
you can also invest in a real estate syndication (like ours) with your RRSP money .. see RRSP Options .. or you buy publicly traded stocks or REITs that invest in real estate !
you canNOT .. you can add it as a second mortgage after you close though .. to flush out your own cash to close .. so you buy a 160K house with 20% down .. i.e. 32K .. then add a 30K 2nd later to pay you back the 30K ..
OlympiaTrust is on firm that does it .. as the RRSP trustee has to approve the 2nd mortgage ..
you can also invest in a real estate syndication (like ours) with your RRSP money .. see RRSP Options .. or you buy publicly traded stocks or REITs that invest in real estate !