Real estate leverage allows you to borrow against your residence to make investments that have enough return that the profits will help you pay your mortgage off faster. The gross income from the investment can be used firstly to pay the line of credit interest (a tax write-off from the investment income) and secondly to make extra payments on your existing mortgage. Learn more about the All-In-One Mortgage.
The beauty of real estate leverage, is that when the investment matures, the principal is applied to the balance on your line of credit, and you get to retire early!
Your line of credit can be used to lend money on a secured private mortgage investment arranged by our mortgage brokers.
How does a private mortgage investment work?
Quite simply, you borrow money at 4%, and lend it to a client at rates as high as 16%. Your investment is secured as a second (or sometimes first) mortgage over the client's home.
Is a private mortgage investment profitable?
If you borrow on your line of credit at 4%, pay taxes on the income you receive from the private mortgage investment, and apply the rest of the interest income to the principal on your line of credit, you will have received the full value of your line of credit in 10 years time. That is doubling your secured investment in 10 years, AFTER TAXES. You would double your investment in 5-7 years BEFORE TAXES, depending on the interest rate.
Is it safe?
No investment is risk free. We are looking for mortgage investors who have experience in the real estate industry. Whether your knowledge base has been gained through personal investment experience or is career related, we will help you fill in the gaps to decide whether a particular private mortgage investment is right for you.
Who controls the private mortgage investment?
We arrange the borrower's documentation and property appraisal and submit the application to you. Ultimately you make the decision. We will assistance you by providing a loan approval for your signature that makes sense to the deal and covers the necessary instructions to your solicitor. Once you have agreed with the approval terms, you will choose a lawyer to represent you in the transaction, and who will secure the mortgage on the property (at the borrower's expense). From there the private mortgage investment is controlled by you and the monthly interest cheques are made payable to you directly by the borrower. We require the borrower to provide 12 post dated cheques for a low hassle 1 year term investment.
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