Thursday, July 29, 2010

What is the meaning of RRSP 2nd mortgage in Canada?

In other words, can I use my RRSP as downpayment? how does it work?THANKS.What is the meaning of RRSP 2nd mortgage in Canada?
Yes you can, but it is not a 2nd mortgage. I think you can borrow 20,000 from your RRSP to use as a downpayment on your first home (or a subsequent home if you have not owned for more than 5 years), 40,000 for a couple.





After the first year you must pay this back into your RRSP over a number of years, 20 maybe. If you don't do the repayment there will be a tax penalty similar to that which would apply if you took money out of your RRSP for any reason.





You should check with a mortgage broker, they will know the current legislation. I am not sure of any of those numbers because the rules change.
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