How is my Investment Protected?

All mortgage loans are secured by real property in Ontario. Upon the investment closing, the investor(s) will be registered on title to the property the same way that a bank would be registered on title when they provide a mortgage. Since the property provides the lender with the security for their loan, it is paramount to protect the investor’s interest in this property. Before closing, the lender(s) are made beneficiary on two types of insurance. The lender(s) are added as a loss payee on the fire insurance policy of the property. Additionally, the solicitor ensures a title insurance policy is taken out for the benefit of the lender providing additional protection.

To compliment these protections which heavily mitigate risk at the time of closing, Hosper Mortgage also has a full-service admin team who manages your loan throughout the term of the mortgage. This naturally serves to mitigate risk since the Hosper Mortgage admin team is in constant contact with the brokers who arranged this loan with the borrower, and also have the resources to contact the borrower directly should there be any issue with the loan throughout the mortgage term.

Why do Canadians typically request a private mortgage?

What is a typical return on investment? The answer to this question is two-fold. The first aspect to understand is the need for borrowed funds. Common reasons include:

  • To purchase a new home
  • Debt consolidation (combining a number of unsecured debts into a single monthly payment)
  • Renovations to their existing property
  • Obtaining a down payment to buy a second property, or to bridge a gap between selling and buying a principal residence
  • Family debt & divorce
  • Business investment (banks are particularly stringent when lending to business owners)

The second question at hand is to understand why they are not borrowing from a bank? Common reasons include:

  • The borrower has an urgent need of the funds, and the bank’s process is too slow
  • Occasionally applicants are not willing to satisfy all banking conditions (i.e. a bank may require the applicant to close other credit facilities, discharge other encumbrances on the property etc.) and the applicant may wish not to do so.
  • The most common reason a borrower is seeking funds from a private lender is simply that they have been denied by the bank. Generally, this grouping of applicants has damaged credit or challenges with meeting the bank’s requirement for income ratios. Whatever the reason may be, Canadian banks have increasingly tightening criteria which have resulted in more Canadians in need of borrowing money directly from other Canadians.
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