Nov 2, 2019
Today we are discussing the basics of using the Private mortgages and the RRSP mortgages. A lot of time private mortgages are used by an individual if they are thinking of borrowing for a home or considering lending money, private loans can be beneficial for everybody if they’re executed correctly.
As you evaluate the decision to use (or offer) a private mortgage, keep the big picture in mind. Typically, the goal is to create a win-win solution where everybody gains financially without taking too much risk.
Private mortgage lenders are useful for investors and others who have a hard time getting approved by traditional lenders. However, they are often more expensive than other mortgages. Often times private mortgages are used by an individual where the properties are not optimized yet. Things like increased rents, reduced vacancy, some repairs, some renovations that needs to be done. So we can't get maximum long term financing. Thus in the mean time we borrow money from private lenders until we increase the value of the property and get better financing option.
An RRSP is able to lend money securely on title by a mortgage on a property. This is really no different than the banks lending money as a mortgage on a property. This is a type of mortgage that can be held within your RRSP mortgage account, to lend money on a specific property that you are considered ‘arms length’ to, or have no direct ownership in the property through blood, marriage or adoption.
We bought a land in Alberta back in 2017 with mostly RRSP money and some investors cash. And our plan is to build a senior center and apartment building. We expect to do really well in this investment so we can pay really high interest on that and still make really good money on it. Other ways we've used RRSP mortgages is as second mortgages on houses so we can maximize the number of properties we can buy with your down payment and you can get better interest rates.
I am sure you might have used Private and RRSP mortgages some other ways than how we've used so please share that with us on my Facebook video.