Most investors only ever buy property. The other side of the deal is lending the money, and it can pay you a steady return that is secured against real estate. No tenants, no toilets, no renovations. This path covers how a private mortgage works, how to protect your money, and how to lend using your RRSP. You do not need enough to fund a whole mortgage to get started.
Lending gives you a steadier return than owning, but you give up the upside. Gretchen Casey lends her own money and goes through both the good and the bad.
Action step: Write down the return you want, and the one risk that would make you walk away.
As a lender your protection comes from the paperwork and where you sit on title. Anna Scott explains how a private mortgage is put together and what actually secures your money.
Action step: Make sure you can explain first and second position, then decide what loan-to-value you are willing to lend at.
There is no single right way to lend. In this panel our members who lend talk about the deals they do, the ones they turn down, and what they charge.
Action step: Write down the rate, term and loan-to-value each of them uses. Pick the one closest to how you want to lend.
The commitment letter and the mortgage documents decide what happens if the borrower stops paying. Learn what the terms mean before you are asked to sign anything.
Action step: Keep this list beside you when you read your first mortgage commitment.
Your RRSP can hold a mortgage, not just mutual funds. Done properly your registered money earns a secured return inside the plan. Chad Robinson covers how to set it up.
Action step: Check whether your RRSP is with a trustee that allows arm’s length mortgages. Most of the big banks do not.
You do not need enough money to fund a whole mortgage to get started. A licensed mortgage administrator lets smaller amounts go into a larger loan. Dalia Barsoum explains how it works.
Action step: If you have less than a full mortgage to lend, pick one mortgage administrator and ask them how they handle a default.
Our members who lend meet as a Special Interest Group and we record the sessions. This is the fastest way to see real deals, current rates, and what other lenders are dealing with right now.
Action step: Watch the latest recording and bring one question to the next session.