Wants a RRSP mortgage on a rental property

Q – Can I use my RRSP funds to give myself a mortgage on a rental property that I own? This will be a second mortgage. – S.N.

A – There appears to be nothing in the rules to suggest you cannot do this. Your RRSP is allowed to hold “non-arm’s length” mortgages, which this would be, as long as certain conditions are met. However, the fact it is a second mortgage may make it more difficult to fulfill those conditions.

Essentially, any such mortgage must be under terms that are comparable to those that would apply to a regular mortgage obtained through a conventional lender. That means, for example, that the interest rate must be in line with the market – you can’t give yourself a sweet deal.

One of the key conditions that must be met for an RRSP loan as that the mortgage must be NHA-insured. Second mortgages can be insured under the program, which is administered by Canada Mortgage and Housing Corporation, but the requirements are strict. For details, visit the CMHC Web site at

There is a full chapter on RRSP mortgages in Gordon Pape’s 2001 Buyer’s Guide to RRSPs. You may want to read through it before making any decision. – G.P.