Olympia Trust (“Olympia”) is the major player for anyone who wants to do a registered plan mortgage. 

Anyone with an RRSP or TFSA, LIRA, or other qualifying registered plan can lend money from that plan. Such a loan must be protected by a mortgage and meet various CRA and in-house Olympia rules.

Recently, a deal showed up on my desk where the buyer's financing was all coming from an RRSP lender. The purchase price was $150,000. The inexperienced buyer and inexperienced RRSP lender agreed that the buyer could put up a $3,000 deposit and get an RRSP mortgage for $147,000.

A quick Google search came up with numerous posts indicating that Olympia allows a loan-to-value (“LTV”) ratio of 100%. So, theoretically, as long as the property was actually worth $150,000, the loan-to-value ratio for this situation was 98% thus meeting the Olympia requirement of a maximum of 100% LTV. Looks good so far.

The trouble here is that in August 2023, Olympia lowered their maximum LTV from 100% to 90%. That meant this buyer would have to put up $15,000 rather than $3,000. Negotiations are currently ongoing to see if the buyer can come up with the extra deposit.

LESSONS LEARNED

The Internet is not necessarily up-to-date or accurate. Borrowers and lenders MUST check with Olympia for all their current requirements before committing to a deal.

Registered plan loans are always difficult when inexperienced buyers try and work with inexperienced lenders. Allow twice as much time for both financing approval and then closing after condition removal for these kinds of loans.

Olympia's LTV requirement is now 90% NOT 100%.

Protect yourself.

Cheers,

Barry

I'm taking on new clients. Please consider me and Field Law when you write your next deal.