Are there any RRSP investor/lending “Rules of Thumb”?
A. Out of all the questions I get asked about, this area is the most talked about and batted about. What interest rate should I offer or expect to pay for an RRSP 2nd mortgage. The answer is not so cut and dried, but in the end, it comes down to what you two are comfortable with, decide upon, and on what the RRSP investor/lenders professional team advise him/her to do. A more aggressive RRSP investor/lender may favour the greater return potential of the equity participation, but THEY have the responsibility to more due diligence to make that call or choose that option. (Dont forget the Independent Legal Advice letters, particularly with these kind of mortgages) To hone in on the zone, the following items are to be considered: What is the Loan To Value ratio What is the track record and strength of the people involved What is the property and its area all about Find out what the in-the-street market value of mortgages are. Select a baseline of comparison, like the 5 year posted rate and
