Private Mortgage Investors!

Why Invest in Private Mortgages?

  The most secured and durable investment is real estate property. History has proven that although real estate prices may have fluctuated from time to time, over the long-term real estate property has appreciated in value. The security for a mortgage is real estate property.  Private mortgages provide a regular income stream, tangible security and a real return to the investor that is superior to bank deposit, GICs and bonds. The big-chartered banks in Canada have often been criticized for charging exorbitant service charges. However service charges at best probably only cover the overhead costs incurred by the banks in their operations. Their favorite money making venture is undoubtedly the mortgage business.

There are reasons why theseinvestments are so highly sought after, which include the following:

•  Low Administration Costs: Each of us who have had a mortgage know how long it takes to pay this debt off. The Banks know this as well. The borrower is required to pay the costs to have the mortgage registered against title to their property. The Bank simply sits back and goes about cashing the monthly payment for years without incurring any further cost whatsoever.
• Cash-Flow:A mortgage generates cash each and every month. Obviously the amount of the monthly payment will depend on the size of the mortgage, the interest rate and amortization period. However the payment comes in each month if the borrower does not want to lose their home. The fact is that the mortgage payment will be the last payment not made by someone in financial difficulty, and if bankruptcy occurs, a mortgage holder’s security is not affected by the borrower declaring bankruptcy.
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• Protected Capital: Perhaps the main reason why Banks love mortgages, and why they fight tooth and nail with each other for this business, is the low risk associated with these investments. Obviously the risk associated with a first mortgage is less than the risk associated with a second mortgage, but then again the return from holding a second mortgage is substantially greater.

Private mortgage investments can be funded by you in and or outside your RRSP gives a minimum of 10% Yield Rate of Return Secured by a First or Second Mortgage on a Real Property in Canada. There are huge tax advantages to use your RRSP savings. 

At a rate of 10% yield rate of return, your RRSP portfolio should double in value every 7 years according to the rule of 72. At 16% return you will have a real chance retire at the age you can still enjoy many years in dignity.

Private mortgages can be a great investment, since there is great security with the equity on real property. Even if a debtor reneges, the property can be used to help pay off the mortgage. 

It is also an easy investment to make - private mortgages require little baby-sitting or watching of an investment. Money is paid regularly and the lender is fully covered by the legal documents signed at the time of the mortgage, ensuring that the investment as well as a profit is collected. Our short video presentation provides you more details on the process.

Since private mortgages are so good for investors, many think that they do not offer a great deal for property owners, but this is not always the case. Property owners turn to private mortgages for many reasons. Not all private mortgages are high interest - some do offer good rates. In some cases, property owners turn to private mortgages if they simply are a very poor credit risk and cannot get financing elsewhere - and then switch to a non-private mortgage with better rates as one's financial status improves. Finally, there are usually no greater risks with private mortgages than with other types - the same legal documents are used to protect the lender.