**Posted in 2008.**

Again the promoters want to take advantage people’s dislike of taxes.

The premise behind the plan is the make the interest on a mortgage tax deductible, by putting one’s mortgage into a self directed RRSP. Mortgage payments then become RRSP ‘contributions’’.

However there are 2 catches.



The most important one is that the interest rate one can charge oneself is limited by the prime lending rate. In today’s low interest environment a person would be cheating themselves out of a better return by locking into a low interest rate. They would be better off using alternate investments that would potentially have a higher rate of return. Also the mortgage must be administered by an approved lender who is going to want their share of fees.

There is another process that can possibly make mortgage payments tax deductible. I will discuss that in the next newsletter.

Both universal life and the mortgage plan pay high commissions to the people who sell them. This could be one reason why their profile has been raised in Canadian provinces. Remember that planning and discipline enable someone to achieve their financial goals, not the purchase of a financial product.