As a mortgage broker, many people know that I can provide many different types of financing, from residential "A" mortgages, to institutional "B" mortgages, and private and commercial mortgages. However, most do not know about another program that I can provide that helps people in their lives.
Many people go to the bank and speak with a financial advisor who typically will recommend one of the banks mutual funds or a "safe" investment in a GIC that will pay between 0.5% and 3%. Mutual funds have had a rocky and rather abysmal track record over the last few years, and with a return like they are offering on a GIC, you lose on inflation alone.
Wouldn't it be great to have a stable investment with really good, consistent returns?
I think so too! That is why I have a great investment for you.
As mentioned above, we offer mortgages in this industry where people have a lot of equity in their homes, but may have had credit difficulties, or need a temporary loan, or wish to consolidate debt but do not want to break their current mortgage. These are called "private mortgages" and are a safe investment with terrific returns over the long term.
Why are private mortgage investments safe?
As mentioned, in order to qualify for one of these loans, a private mortgage borrower will usually need at least 25% equity in their home. In many cases, they will have 35% or more.
Why is equity in the property required for a private mortgage?
If you are investing in the property and a mortgage borrower defaults on their loan for any reason, the equity in the home is your protection to ensure that your investment and return is covered. The equity will cover any legal fees required to foreclose on the property, any repairs needed if there has been damage done to the property, any accrued interest on the loan, and any market losses in the event of a market downturn in real estate values.
This is not usually necessary to worry about, however. Real estate values have been well protected by the Canadian government through making prime mortgage lending policies more and more difficult over the past 3 years. Additionally, foreclosure rates in mortgages are currently at 0.47% in British Columbia and have never been higher than 0.66%. Private mortgages tend only to be slightly higher than prime mortgage foreclosure rates.
Also, you have the additional security of investment in a Mortgage Investment Corporation (MIC) that works to your advantage when investing through Centum Innovative Financial. For example, if you hold a second mortgage on a property, and the borrower defaults on the loan, you will need to pay off the first mortgage holder in order to foreclose on the property and recover your investment. It can be a difficult task possibly to come up with that much money. By investing in a MIC, you are taking advantage of a highly regulated investment and the pooled nature and regulation of the investment ensures the necessary liquidity to be able to move forward with recovery of the mortgage loan.
Private mortgage investment offers a terrific return, and is a stable investment option with all the advantages of investing in real estate. There are also many different ways it can be structured for your individual needs to your advantage. Contact me today for more information.
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