i's. GREAT HAVING
MOTHER AS JOINT OWNER
AND LIVING IN THE
IN-LAW SUITE!

Loan better than gift

- BUYING A home with the
.: help of parents or your
, RRSP, keeping your money

” "safe — you send in the ques-

:- tions and we provide the
i. aaswers.
“7'm a fairly young widow liv-

* "ing alone on a comfortable pen-

ston. Rather than making the kids

>. wait until I cash in my chips —-

‘which might not be for another 20
‘years (if I quit smoking) — should
-Thelp them out financially to buy
‘a home? Perhaps the place could -
.., have a self-contained suite for me
“and my rent would help with the
. -mortgage?” —BE.
By’ all means talk to the kids. But

“rather than giving money, consider a”

Joan or shared purchase. Otherwise,

an ex-son/daughter-in-law, might end

“up with half your money,’

‘Discuss an arrangement fair to all

; involved. You don’t want any family
fights. If you live in a suite in the
house, that might help financially.

: But make sure it doesn’ t cause prob-

lems on a personal level,

“Ts it a good idea to give your-

self a mortgage from your
RRSP?” — CH.

“= You may borrow money from
“your self-directed RRSP and lodge'a
~ mortgage on your home as security

: for the loan. Even though that puts

> eash in your hands, there are no tax...

PLM GLAD ed
WE WORKED
Our ALL THE
DETAILS... pat

Nike
Grenby

and sense

consequences as your RRSP has
simply invested in a mortgage.

If your RRSP can earn a higher
‘retum on this mortgage than on
other investments, the arrangement
can pay off. Because of the setup
" costs, the longer the RRSP holds the
‘mortgage, the better.

“If I put $60,000 into a five-
~ year deposit with interest that
compounds each year, won't Igo
over the Canada De
LD Corporation limit?” —

Yes. So always calculate the
“value of your compounding deposit
‘when it matures, to make sure that

» final value is below the i insurance

Maximum. -
» For example, if i interest com- -

\f IT FEELS
RIGUT—
GET ITIN
DISTURB iL WRITING !
NOON ON

WEEKENDS /

pounds annually at 7% for five
years, deposit no more than $42,779,
which will grow to $59,999.76,

Even if interest pays out annual-
ly, you risk any amount (principal
plus interest) over $60,000. So if
you invest $60,000 at 6.5% annual
interest and the company fails before
paying the interest, you stand to lose
the interest. /

“Are reverse mortgages good
for retired folk?” — S.W.

A reverse mortgage can be a
great way to draw an income, usual-
ly tax-free, based on the value of
your home — as long as the grow-

ing mortgage won't cause a problem -

in the future when the home is sold
on or before your death.

__ With most plans, you take out a
Mortgage to provide a lump sum
and/or income from an annuity. You
make no payments; the compound-
ing interest is added to the mort-
gage.

Mike Grenby is a columnist and
independent financial adviser who
works with individuals; he will
answer your questions in this col-
umn as space allows (sorry, he can-
not reply individually) — write to

him c/o 2444 Haywood Avenue, West

Vancouver V7V LY1.

BUSINESS

Aaya

“Wednesday, October 25, 1995 - * North Shore N News ~ 38

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