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Be your Own Mortage Lender
A self-directed RSP allows you to hold your own mortgage as an investment – just as you would a bond, treasury bill, stock or mutual fund.
The RSP provides cash for your home purchase and you pay it back at the same rate as you would a conventional lender. This can be an attractive RSP investment since mortgage rates are usually up to two percentage points higher than yields on fixed-income securities of similar term. The tax rules require your RSP to charge the same mortgage rate as a commercial lender would. To maximize the growth of your RSP, shop the mortgage market for the highest rate that applies to your desired term, not the lowest. That will mean higher mortgage payments now, but greater tax-sheltered growth for the future. Note, though, that additional fees make this worthwhile only for RSPs that can fund a mortgage of at least $50,000.
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