in Canada Mortgages and working with the best Canada mortgage broker
for the best mortgage investment in Canada as a private mortgage
Many private citizens that have RSP funds or RRIF funds
are disappointed. Their current returns in their registered funds
are not doing too well…tired of term deposits with lousy
returns … stocks and bonds that go up and down in value…that
are wishing for a better return by investing in private mortgages.
They are choosing to invest in the private 2nd mortgage Canada
marketplace. When done correctly the investment is safe. You can
even use your RSP and RRIF funds to make investments in private
Many citizens become investor/lenders in giving private Canada
mortgages to other borrowers in the form of Canada equity home
loans or Canada second mortgage loans. The earnings are very attractive.
So are the safeguards.
The first safeguard is choosing the right Canada mortgage broker
to do business with. At our site we have Gregory Stanley AMP CFP
as the expert advisor on mortgages. He has expertise with 20 years
experience in the financial services industry.
Gregory has a few rules about private mortgage investing. Yes,
rules. He won’t act as your mortgage broker if the rules
are not followed exactly.
One: the mortgage investment must meet your risk tolerance. He
ensures this by limiting mortgage investments to properties that
only have strong resale value. Most properties in populated areas
across Canada would satisfy this requirement. But the property
has to be ‘normal’ to the area – normal house
on a normal city lot – on city sewer and water. Normal means
Second: each property is subject to a satisfactory appraisal to
the private investor. It is important that the property is not
the worse one on the street or the very best one on the street.
The property must be an average house on an average street and
Third: the loan to value (LTV) ratio must be low. Gregory prefers
that no investor/lender invest into any mortgage investment where
the loan would exceed 75% of the appraised value of the home. Other
brokers don’t care and go up to 85%. But, Gregory doesn’t
agree with this practice. Gregory wants to see at least 25% equity
still in the property after a 2nd mortgage Canada loan is made
from the private investor/lender to a borrower.
Four: ‘Owner Occupied’ residential properties only.
It has to due with liquidity, and marketability. The property has
to be owner occupied. No rental properties. Gregory believes that
the best mortgage investments are ones where the owner is living
in the home. Their home!
Five: A fair interest rate of return for the private investor.
This is usually 12% on a 2nd mortgage loan and between 8 to 9.5%
for a 1st mortgage. Again, the maximum LTV is 75%. Often the payments
to the borrowers are based on interest only payments. So a $30,000
private mortgage investment would pay $300 per month interest to
the private mortgage investor/lender.
Six: No third or subsequent mortgages for obvious reasons. No LTV
Seven: there will be no costs incurred by the private investor/lender
because the borrower pays for all appraisal and legal costs. The
mortgage broker does not charge a fee to the private investor/lender.
Eight: diversify into several small mortgage investments rather
than one or two large ones. For example, if you have $100,000 then
Gregory would prefer to see you obtain 4 investments worth $25,000
than just one $100,000 deal. Gregory is trained as a certified
financial planner and asset allocation and diversifying your investment
holdings is something that he insists on.
Nine: choose the right Canada mortgage broker to help arrange the
loan between the private investor and you – the investor/lender.
Gregory Stanley was one of the very first mortgage brokers in Canada
to become an Accredited Mortgage Professional, and he is one of
the only ones to have also become a Certified Financial Planner.
He has over 20 years experience in the financial services industry.
He is friendly, sincere and helpful. On the homepage you will see
him in the ‘Ask a Consultant’ section. Feel welcome to
ask him a question.
So we have the following rules for private mortgage investng (1)
Strong resale value of subject property (2) satisfactory appraisal
(3) maximum 75% LTV loan (4) ‘owner occupied’ residential
property only (5) good rate of return i.e. 12% or 1% paid monthly
(6) no third mortgages allowed (7) no costs to the investor (8)
break up your investment into several smaller loans and (9) choosing
the right Canada mortgage broker.
Gregory Stanley CFP AMP believes that by following the above rules
the private mortgage investment is safe. The risk has been minimized
as much as possible. And the reward of return is worth it. He believes
in ‘know your client’ rules and will not let anyone
invest that he doesn’t think is right for it.
When you compare a fixed rate of return of 12% with no commission
fees or management fees to other investments (i.e. mutual funds)
there is no comparison for the rate of return versus risk. Gregory
Stanley prefers secured mortgage investments.
To learn more about
being a private mortgage investor or lender CLICK HERE