What yields can I obtain on a mortgage investment?
At the present time, the mortgage yields we offer to our investors range from 9% to 11% dependent upon the equity and complexity of the transaction. See our [Sample Mortgage Investments] page in order to familiarize yourself with the types and size of mortgage investments that we deal with.
Do I pay a fee to invest?
No. There are no fees or administration charges of any nature if you invest your own personal funds. If however, you decide to invest your RSP funds, then the financial institution that administers your RSP will charge you a fee, however in some cases that fee may be passed along to the homeowner.
How long is my money tied up for?
We do limit the term of each mortgage investment to a maximum of 1 year. It may be possible to cash-in your mortgage investment before the 1yr. term expires, however you would then be responsible for the cost of transferring the mortgage to a new investor. In order to avoid the cost of any transfer, you should assume your funds will be tied up for the 1yr. term of the mortgage. So there is no misunderstanding, at the end of the 1 year term you are under no obligation whatsoever to renew the mortgage. If you do however decide to renew for another year, you may also adjust the interest rate at that time to reflect current market conditions and you will also earn a renewal fee of $450. If you are not renewing, please notify our office and a new investor will be assigned, at no expense to you.
How safe is a mortgage investment?
Any investment involves risk, although you can control the degree of risk by being conservative with respect to the equity position that you will accept. While the personal situation of any homeowner may change, it is the equity in the property that ultimately protects your investment. If for instance you do not wish to renew a mortgage at the end of the term and there are any arrears on the transaction, it may effect your ability to have the mortgage reassigned if there is not sufficient equity to cover any arrears. In all cases, the greater the equity, the safer the investment.
What happens if the homeowner doesn’t pay?
There is a schedule attached to each mortgage that provides substantial fees to you in the event of any disruption in payments. Under the terms of the mortgage, the homeowner must issue you 12 post-dated cheques on closing. If any of those cheques are dishonoured, you can then charge the homeowner up to $175. for “each” returned cheque. If the cheque is not immediately replaced, we can orchestrate a 3rd. Party Demand Letter, for which you can then charge up to $500. in addition to the $175. for a total of $675. It is actually to your advantage if a homeowner is slow in making some of thier payments, as you can then earn hundreds of dollars in additional fees. In a worst case scenario, our Corporate Solicitors can force the sale of the home. A forced sale is an extremely rare occurrence, however please keep in mind that a loss could occur if there is not sufficient equity remaining to cover the costs of liquidating the property.
What happens if there is a real estate crash and property values decrease?
If you feel property values may fall during the 1 year term of your mortgage, then you should only invest where the equity exceeds what you feel may be any potention decrease. Only you can decide what your own comfort level is however please keep in mind, the greater the equity, the safer the investment.