Canadian Private Mortgages

Private mortgages are an alternative financing source in the Canadian mortgage market. Borrowers who may not fit the rigid restrictions of traditional lending institutions may find that a private mortgage is the best way to secure financing for purchasing a property, refinancing, or consolidation of debts. Conversely, for an investor, a private mortgage can offer high returns on capital invested with a reasonable assessment of risk. The only complicated part is putting together investors and borrowers whose needs are requirements are a match. That's where SaveCapital Financial is able to assist you.

We can provide you with more information - whether you would like to participate as a BORROWER or as an INVESTOR.

Investing in Private Mortgages

Investing in private mortgages can be a high-yield strategy for capital growth and risks involved can be effectively managed. The type and size of the loan, the property being mortgaged and the supplementary terms of the loan should all maximize your return while minimizing your risk.

An investor in private mortgages typically only works with loans with a very low LTV rate (Loan to Value Rate), usually between 50% and 70% of the actual value of the property. Meaning, that if the property being mortgaged is worth $100,000, the investor would only deal with a maximum loan of $70,000. This is the first practise designed to protect the investment.

It is recommended for investors new to private mortgages to stay with residential or recreational properties at first. Likewise, it is a good idea to only handle loans in your own geographical area, where you are familiar with the real estate trends and developments.

Moderating the risks also moderates the potential yield, but even in situations of minimal risk, an investment in private mortgages retains the potential to out-perform many other growth arenas.

Private mortgages can also be held in a self directed RRSP. Mortgages are an ideal RRSP investment because they earn interest income that can be sheltered within the RRSP. If you were to invest in a mortgage outside of your RRSP your interest income would be taxed at your full marginal tax rate, thus lessening the benefit of your investment. Holding such an investment within your RRSP is an effective tax shelter while your investments grow.

Borrowing on a Private Mortgage

As a borrower, it is assumed that a private mortgage is an option engaged when traditional financing institutions have been unable to help. You may be self-employed, have a bad credit history, or it may just be that the property does not fit the requirements of the banks and CMHC. Whatever the specifics of your situation, there is likely an investor out there willing to meet your terms, providing you are willing to meet theirs.

A private mortgage typically requires a higher rate of interest - reflecting the additional risk the investor assesses in the course of your application. The value of the property, along with your ability to maintain the mortgage, are essential keys in negotiating the terms of the mortgage and finding the right investor for you.

Please give us a call at 1-888-777-2120 or fill out an online application to begin a dialogue with SaveCapital Financial today!