Self-directed RRSPs: a dying breed?

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Banks have pulled back on their willingness to facilitate mortgage investment as part of self-directed RRSPs – a concern for brokers worried about shrinkage in alternative funding.

“People used to be able to use their RRSPs to fund mortgages – whatever kind of mortgage they wanted to fund,” David O’Gorman, president and principal broker of MortgageLand Inc. told “And now (they) can’t do that through the bank; there are only three companies that allow you to do it: Home Trust, Community Trust and Great Western.”

In a self-directed RRSP, investors are free to choose where their money is invested.

“You call the shots on what you want to invest in, whether its stocks or mortgages – and not necessarily bank-run mutual funds – and you could put the RRSP money with a borrower to fund a mortgage,” O’Gorman said. “(And they can be used to) fund other peoples’ mortgages.”

With banks – and more lenders in general – barring clients from using self-directed RRSPs, the public has begun to view them as insecure.

“It’s made it more difficult for people to do these sorts of investments,” O’Gorman said. “They think that if the banks aren’t doing it, it isn’t safe.”

However, though there are risks – as there are with any other investment – they are a way of injecting more money in the marketplace. And lenders refusing to allow these investments are essentially limiting the competition, according to O’Gorman.

“It’s starting to take some of the private money out of the marketplace and it’s the bank’s intent to limit the potential of competition,” he said. “It’s taking an option away from the investor and from the broker. It’s less money available to do mortgages.”

Still, there are a few lenders who allow self-directed RRSPs.

However, “most of those companies that are set up to do it are reasonably small,” according to O’Gorman.

  • Paolo Di Petta | on 2013-10-11 8:59:29 AM

    There's actually a few other institutions that allow lending through a self-directed RRSP. Community Trust comes to mind...

  • dml on 2013-10-14 6:51:00 AM

    Paolo did you read the article? it mentions Community trust.

  • Claire Drage on 2013-10-14 9:33:57 AM

    In addition to Great Western, there is also Olympia Trust (my favourite) and B2B - I didnt know Home Trust did it as well...really? I'll have to check them out!

  • Donald Wilson on 2013-10-14 9:44:28 AM

    Canadian Western Trust and Western Pacific Trust will also facilitate these. CWT is extremely organized for this, and supports the broker well.

  • Paolo Di Petta | on 2013-10-15 6:11:33 AM

    dml - I did. I could swear it wasn't there the first time around. weird.

  • Bryan Guertin Mort. Intell. Oakville on 2013-10-15 10:35:20 AM

    I have used B2B for over 20 years having a very good relationship, could fund deals in 48 hours. However, since they became a bank they started changing things, all documentaion had to be original signatures which really slowed down the closing.
    Then, in April, they brought in a new rule stating the investor has to have a equal amount in liquidate investment to match the mortgage investments.
    A client of mine that has $460,000 in mortgage receiveables, had $150,000 cash
    He just had been paid out on 2 mortgages.
    B2B Bank would not allow me to fund a replacement deal of $80,000 as he now wouls require liquidate investments of $270,000.
    I am now moving my clients to Community Trust.

  • Ron Butler on 2013-10-15 10:37:30 AM

    Scotia Trust is also a Self Directed RRSP source that will allow investment in private mortgages.

  • John Ribalkin on 2013-10-15 10:58:09 AM

    Have used Olympia Trust for years and they are great to deal with!

  • Michael Sugar on 2013-10-15 11:42:18 AM

    I think this article failed to distinguish between arm's length and non-arm's length mortgages.

  • bruce davison on 2013-10-16 10:26:17 AM

    scotia trust is tinkering with rules - no third mtges a year ago, no 90% this month and maybe 80% LTValue next month and ....

  • Ron Butler on 2013-10-16 10:34:18 AM

    I think no thirds and no 90% LTV makes perfect sense. The real question is why is a mortgage broker recommending 90% LTV on private mortgages.

  • BRUCE DAVISON on 2013-10-16 11:25:52 AM

    the recommendation is from and to this mortgage broker ( ie my rrsps) - just concerned as to why a private company is intervening in to my choices They dont prevent me from buying RIM / Blackberry stock under my self admin stock portfolio?

  • Ron Butler on 2013-10-16 11:33:22 AM

    @Bruce, buying Nortel at $149 a share was certainly allowed in a SDRSP but if I put a client into a 95% LTV private third SDRSP or not I know my E&O premium is set to sky rocket. It may not be fair but its a fact of a mortgage broker's life.

  • on 2013-10-16 11:54:28 AM

    again, the "putting the client in to these investments was putting bruce davison, the "client" ( ie as the investor/ broker) as the lender thru my rrsp- nothing to do with E&O insurance
    3rd mtge was to a recently unemployed client with an existing first mtge at prime minus .75, and a line of credit at prime plus .50. He wanted cashflow back up for 6 months to get him thru re employment -He didnt want to disturb his existing financing good terms Loan to value with my 3rd mtge at 8% ( total closing fees, appraisal etc all in at $600) for a 1 yr term, fully open was less than 50% including the 3 mtges. Client was delighted and actually paid off the 3rd in 7 months
    2nd mtge to 90%- client recd notice of power of sale, needed to correct arrears and have some time to sell A $ 10,000 to 88% LTValue gave him over 8 months to sell his home, rather than the bank forced sale. He ultimately sold for more and my third was, based upon his sale price, "only" 85% vs my appraised, initial valuation
    his total cost all in to me was $ 1500 for legals, brokerage etc and it gave him time to recoup over $ 30,000, net vs a potential loss from huge legals and sale under value
    I DONT NECESSARILY RECOMMEND THESE TO MY INVESTOR CLIENTS- these are SELF admin mtges. The end result benefited both my long standing clients and myself. AGAIN, i Object to the trustee intervening in my wishes, when there are no legal rules preventing me to lend on these type of mtges, ... RARE AS THEY MIGHT BE that I would be doing such.

  • Ron Butler on 2013-10-16 12:12:48 PM

    @Bruce, if you as the mortgage broker are the investor on these mortgages that's cool, you cannot make an insurance claim against yourself but I think we would both agree that putting investors into 90% LTV is not good. As far as Scotia Trust limiting options, well, TD limited private mortgages right out of SDRSP existence so I am okay with Scotia staying in the game with restrictions.

  • Paolo Di Petta | on 2013-10-16 12:19:48 PM

    I'll agree that putting investors in 90% 2nds isn't necessarily the safest product (personally not my thing), but it wasn't too long ago that brokers and banks alike were peddling "5% down + cash-back" mortgages...

    Obviously the clients were less risky, and things like CMHC insurance and the rapidly appreciating market helped blunt some of the risk, but it's interesting to see how inconsistent banks are about standards across products (mortgages, SDRRSP, other investment portfolios, etc).

  • David Marco on 2014-03-28 3:10:19 PM

    I have had a mortgage with B2B when they were a trust company since 2009. One year term interest only. This year they won't renew it and I have to move it to CWT. FYI CWT is terrific. Patently unfair that they force us investors to now move these mortgages to another institution at our own cost. We have to pay these legal fees and can't pass them on to our clients. I would love to organize and see if we can force them to compensate us for their policy change. Feel free to contact me.

  • Paolo Di Petta | on 2014-03-28 3:38:50 PM

    @David - I had a contact there who did facilitate easy transfers, and waived some of the various fees. He has since retired though.

    CWT isn't the only option though. If you're looking for a new broker to work with, get in touch.



  • David Marco on 2014-03-28 4:40:17 PM

    To Paolo. Thanks. I'm a mortgage broker and realtor. I underwrite my own deals. B2B waived their fees. My issue is that now I have to assign my mortgage to CWT at my expense because B2B doesn't want to hold my interest only mortgage. Fair? I don't think so. I've had this mortgage in place with them since 2009.

  • M Holmes on 2014-07-16 5:47:01 PM

    Any one who holds a mortgage in a rrsp with Canadian Western Trust should be extremely worried with communication received from the bank. Recently lost a large investment because CWT put a email change for monthly statements but still sent important mortgage foreclosure documents to an incorrect email address. CWT did not request a read receipt or send any information by regular mail. Shoddy work by this bank left a retiree with lost funds. My understanding is the file went thru 3 different employees (obviously unskilled).

  • gail c on 2014-07-17 1:37:59 PM

    I appreciate all the comments regarding who's who in the SD-RSP mortgage field . On contacting most of these companies they appear only to permit arms length mortgages. Does anyone have a contact for NON-arm's length administrators. I am neither a broker or a financial planner but would appreciate some direction. RBC Direct Investing no longer offers this type of investment

  • Claire Drage on 2014-07-18 6:56:48 AM

    To Gail: Canadian Western Trust does Non arms length mortgages really well... go onto their website and there is a 21 page document explaining the process and how to apply etc. If you have any challenges feel free to email me at as happy to assist.

  • Steve on 2014-07-18 9:46:46 AM

    Just wondering how lender fees are seen when doing mortgages from your RRSP. Do the fees go back into the RRSP tax free like the interest?

    Also same thing for TFSA would charging fees and having the fees go back in the TFSA bring up your limit?

  • David Marco on 2014-07-18 9:59:22 AM

    On closing you can take your lender fees directly. Interst goes to your RRSP but the fees have your lawyer pay you directly.

  • David Marco on 2014-07-18 9:59:45 AM

    On closing you can take your lender fees directly. Interest goes to your RRSP but the fees have your lawyer pay you directly.

  • Bernie Mayer on 2014-07-18 12:01:37 PM

    CWT gives IMBA members discounts on various fees.
    I moved from B2B about a year ago.

  • Bernie Mayer on 2014-07-18 12:03:05 PM

    CWT gives IMBA members discounts on various fees.
    I moved from B2B about a year ago.

  • David Marco on 2014-07-18 12:25:03 PM

    That's interesting. I will follow up with that. Thanks.

  • Mary W on 2014-07-26 7:41:50 AM

    I have done a lot of research on this product and am so frustrated that lenders are shying away from it. We are looking to set up a SDRRSP mortgage on a 2nd home. We have a SD set up and are currently grandfathered with RBC on a principle residence self directed non-arms and they no longer do new ones. I tried going through CWT for a vacation home (that's the only way they will do a 2nd home)- CMHC will only do one SDRRSP mortgage insured with them (effective May 31/14) the 2nd property has to be a rental.CWT will not do a rental and they won't use Genworth for insurance. I can't quite wrap my head around why and they were not even aware of the new CMHC rule. CTC will organize the SDRRRSP mortgage but it must be insured with CMHC. Genworth will insure a second property non-arms length. I am now trying to organize it with Td/Canada Trust who still do non-arms length but no longer do arms-lengths and they said they can use Genworth. To complicate matters we are self employed, so our situation makes things more difficult to set up. We should know this week whether they will approve us. If anyone has any other options I would love to hear about them. I would love to hear comments about this and any other alternatives that may be available.

  • Claire Drage on 2014-07-30 10:00:44 AM

    to Mary W: Unfortunately the non arms length mortgages are very restrictive - and for a reason - "they" dont really want you to borrow your own RSP which has taxable benefits and credits. There are only three Trustees that I use that will do SDRSP mortgages, but only one that will administer non arms length that you have already mentioned. The others dont want to do it as they dont make any money.. just the small annual fees and of course no interest. The ONLY option is CMHC insured I'm afraid.

  • Mary W on 2014-07-30 4:19:03 PM

    Hi Claire etal, FYI - I have just received word that my SDRRSP mortgage on a 2nd property will be approved. If anyone wants to know how I did feel free to send me your contact info and I will share the ins and outs:)

  • Claire Drage on 2014-08-06 8:07:43 AM

    Mary W: yes I would love to know how you did it... can you email me at Thank you so much for sharing.

  • Syed on 2014-09-26 3:41:30 PM

    Hi Mary W

    Congrats for the approval

    I am doing a lot of research on this topic as I am planning to do it soon , do you mind sending me the info at , please

  • Matt on 2014-10-02 1:52:46 PM

    Thanks for the kind words for CWT from many of you. There are two mortgage packages (non arms length and arms length) that describe the requirements in setting up a self-directed mortgage. As the name indicates it is self-directed so many clients look to mortgage professionals to help them to better understand their options. M Holmes, I am sorry to hear of your negative experience with CWT - If there is a breakdown on our team I would like to ensure it doesn't happen again. I would be happy to look into this further, my contact email is .

  • Paul on 2014-11-05 8:27:03 AM

    I am currently looking into using my lira to offer arms length mortgages, I have no prior experience with this product but have been doing some reading and research. I read some information on a few trust companies and wonder how secure my money will be over the long run, I am looking at doing this for the next 10 years. Right now the money is with a bank and it continues to perform poorly, I understand there is always an element of risk no matter what but the articles on some of the trust companies made me a bit nervous. Any help would be appreciated.

  • Claire Drage on 2014-11-10 12:54:29 PM

    To Paul: I'd be happy to assist you.. feel free to email me at so we can start the discussion to ensure using your funds this way is a good fit for you and then we can go from there.

  • MaryW on 2014-11-10 6:00:42 PM

    FYI...for anyone who is interested, I have been told that Scotiabank is now back into providing non-arms length self directed RRSP mortgages - new since Oct 14, 2014

  • Craig S on 2015-02-23 7:54:47 PM

    Hi all - interesting comments. Let me run this by you and see if any of you have a solution to my quandry. I have a 23 door apartment building in Edmonton. My friend years ago managed to get a Non-arm's length mortgage for an apartment building with his own RRSP money. He paid the CMHC insurance etc but the beauty of it is that he is paying into his own RRSP, and being able to pay a higher interest rate because his RRSP is in 2nd position, relative to the primary loan. I like this idea but do you think I can get any bank or trust company to do this? Ha! I find it odd that any person can go out in an RRSP and purchase all kinds of speculative stuff, but when you want to bet on yourself - you can't do it. I am going to try and see if some of the trust names mentioned here (Home and Community Trust) will accomodate me, but if anyone has any ideas, I am in your debt.

  • Syed on 2015-02-23 9:10:57 PM

    Hi Craig

    I am working on this plan with TD Waterhouse and they can help you out for sure , if you need any assistance in bridging , then I can help you too , please email me at and I can try to do the needful

    BMO 's website has a comprehensive document about it

    I am not sure if they still support it or not as I am planning to go with TD waterhouse

  • Craig S on 2015-02-24 11:11:43 AM

    Thanks Syed for the response. I checked the BMO's website link - and it says the one suite has to be owner occupied, and that it only goes for a maxiumum of 4 suites. I have heard different variations of this from other people, but do you think I can find the relevant CRA documents? No - I can't find ANY CRA documents that spell this out. Also, when I phoned CMHC in Calgary the office guy said that they would have no trouble insuring, but that there had to be a trust company willing to do this. I think that this is the sticking point - no-one is willing to do this, therefore it won't happen. Weird eh?

  • Arbella on 2015-02-26 7:16:01 PM

    Which FI(s) offer NON ARM's Length RSP Mortgage? and thanks for all the info shared on here.

  • Claire Drage on 2015-02-27 6:08:37 AM

    Community Trust and Canadian Western Bank do Non Arm's Length - if you email me at I can send you the discounted fee structure for Community Trust that I have negotiated with them and can pass onto my clients. Non Arms Length can be challenging and dont forget they must be CMHC insured and the borrower qualify under their guidelines, maximum 90% loan to value, add the premium to the mortgage, and minimum interest rate of prime (2.85%), Principal Home Only.

  • Arbella on 2015-02-27 11:01:20 AM

    Thank you Claire :-)

  • Gail on 2015-04-28 6:11:25 PM

    Thank you all for the information and recent updates

  • Gail on 2015-04-28 6:15:39 PM

    Thank you all for the information and recent updates

  • Ravi K on 2015-10-21 5:28:19 PM

    Hi Mary W,

    Can you email me details of Non-Arms length mortgage you manage to secure any TD contact who can help in Toronto will be greatly appreciated.

  • John L on 2016-01-22 8:31:12 AM

    Not sure this person knows what they're talking about. While banks don't advertise it, they are compelled to set up one if their clients so direct. I have one with TD bank and will set up a lease agreement for my company fleet as well. We are seeing that market based RRSPs are just a casino whose potential for growth have been siphoned off by I banks instead of for its intended purpose.

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