3 Ways to Invest in Private Mortgages

July 20, 2011

I sat down with my Dad to talk about how an investor can invest in private mortgages. As president of a Mortgage Investment Corporation (MIC) and over 35 years of experience he has a lot of insight into the world of mortgage investments. Essentially there are 3 ways that an investor interested in mortgages as an investment vehicle can invest:
1. Invest on a one on one basis. The mortgage is written in the name of the investor and all interest payments go directly to the investor usually on a monthly basis. The caveat with this type of mortgage is that all the risk is on the investor and hinges on the quality of the real estate and the borrower’s ability to make good on the mortgage.
2. Invest in a participatory mortgage. This is where a number of investors pool their money together to invest in one specific mortgage. Each investor gets a stake proportional to their investment in the mortgage.
3. Invest through a mortgage investment corporation. This is where a number of investors can pool their money together in a fund which is managed on their behalf and is RRSP eligible. Each mortgage is written in the name of the corporation and the interest earned gets paid back to the investors through a dividend at the end of the each year. The major benefit of this style of investing is that the risk of each mortgage is spread out among the investor over the entire portfolio. This is essentially a mutual fund for mortgages.
If you are interested in mortgages as an investment and would like to explore whether they are a right fit for your investment portfolio feel free to give us a call or write us below. As mortgage brokers we often have opportunities for investors in any of the categories discussed above.
[youtube width=”600″ height=”350″]http://www.youtube.com/watch?v=dFGNymcCZKM&feature=related

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Christopher Molder

Mortgage Broker

Christopher is a mortgage broker based in Toronto, Canada. And a son of a broker too. He’s a second generation mortgage broker. Following in his father’s steps he joined the family mortgage business straight out of university.