Are you a private mortgage lender?
Have you ever loaned money to a client that is secured against real estate? I have helped
match clients with lenders and both have been happy with the end result.
What private lenders expect from a private mortgage is:
Monthly
income from the investment.
An
investment that grows as the mortgage
decreases.
To
obtain
a high rate of return.
Use
this as a tool to grow your RSP tax free quickly.
Independent
financial freedom.
What is a mortgage?
A mortgage is a debt owed against a property with scheduled payments
amortized over a certain period of time. Since most properties are not paid
for by cash anymore, mortgages are needed to allow homeowners homeownership
and for other purposes such as debt consolidation and home renovations.
Are mortgage investments safe and secure?
As any expert will tell you, no investment is 100% safe, except for government backed investments. They
usually only offer low rates of returns for the guarantee.
Mortgage backed securities are one of the most safe and secure investments
if done properly. History proves itself time and time again, just look at
the value of properties over our life time. Historically property value's
have always risen even after recessions such as the one we have just faced.
Based on the continuously rising long term trend in real estate, an
individual lending 80% of a properties value today could have their equity
substantially increase over time.
What rate of return can be expected from private mortgages?
You can expect to yield higher than bank lending rates and higher than any
bank investment. The rate of return is based on the total LTV (Loan-to-Value
ratio). The higher the LTV, the higher the rate of return.
How do you know the value of the property?
Certified appraisers will go to the property and view it inside and out. The
appraisers will determine the value by the direct comparison and cost
approach. Basically, the appraiser will determine a value based on similar
properties in the immediate area that have sold recently. That is one of the
simplest ways to know the property value. If you were to sell your home,
would you want to base your price on what your neighbor just sold theirs
for? As part of private mortgage deals, the homeowner pays the cost of the appraisal and
the lender reviews the report
prior to committing on the deal.
How do private lenders know the current mortgage amount owing before
they lend
money?
The private lenders require the
client to provide an up to date mortgage statement that
shows latest payment made and the most recent 12 months
payment history. The private lenders use this information to help determine
the rate of return to yield the investor. Private lenders also have a lawyer confirm all information is true and correct
before funding takes place.
Who makes sure the mortgage gets registered
correctly?
Real estate lawyers that have done transactions like this
before are recommended. A lawyer will act on the private
lenders behalf and
make sure the private mortgage is registered correctly. The
private lender can choose the lawyer the lender feels most
comfortable with.
Why is lending from an RSP more attractive than
lending cash?
When you lend money from cash, you are expected to claim the interest earned
to Revenue Canada each year. When you lend money from an RSP, the investment
grows tax free until the day you decide to cash out the RSP or make a
withdraw. Why not earn as much as you can now tax free... Private lenders have used
Olympia Trust and Canadian Western Trust as RSP investment vehicles to lend from in the past.
If I invest in a private mortgage, how long is my money committed
for?
The most common length of a term for a private mortgage is one year.
Sometimes a mortgage requires a two year term and
sometimes six months. If private lenders are in the middle of a mortgage term and wish
to get their money out, the private lender or mortgage broker can try and get the client qualified elsewhere's
to pay the private lender out, or the private lender can sell off the private investment to another
investor. We try to get the client and lender suited up in advance to
satisfy both the lender and client needs.
If you are serious about lending out private money to our clients and
would like to know more about this opportunity, Please call Dan Grant at 403-590-9982 to fully discuss private
mortgages.
Email Dan at
dan@dangrant.ca
