Non registered funds, such as equity you pull from your personal residence or non-registered investments in stocks or mutual funds, can also be used. When refinancing, the banks typically mandate that you must leave 20-25% of your equity in your home. For example, if your home valued at $400,000 has a $100,000 mortgage, the bank requires that you leave 20 percent as equity, so you can borrow up to $320,000. This means you can take out $220,000 and lend it out to someone needing a mortgage.

If you are paying 2.75 to 3% on your mortgage and you can make 6% to 10% on a first or second mortgage, this is an excellent interest rate spread and potential opportunity!  Using non registered funds is much simpler than using registered money, because it is a fairly quick process to refinance your home or withdraw money from regular investments. However you do not have access to the same tax deferral strategies or tax exemptions that you do when investing using RRSPs and other registered products.

Registered Funds can also be used inside a SDRSP to Invest in Mortgages.  Follow us for more info!