Mortgage Investing Overview

A mortgage is a loan in which real estate or property is used as collateral. A private mortgage is when the funds are sourced from private person(s) or entities rather than borrowing from an institutional lender such a as Bank.

Private mortgage investing, otherwise known as private lending, is a great investment vehicle for those looking to earn high yielding returns with security on real estate. When an individual invests in a mortgage, they will be secured by a title registration, and a contract that legally requires the borrower to repay the investment based on specified terms, interest rate, and conditions.

All mortgage investment opportunities will be fully secured by real estate, with properties appraised by third party accredited appraisers (AACI) to verify current property valuations and in some cases, projected property valuations. Our in-house team of analysts thoroughly screens borrowing parties, specifics of the loan, proposed exit strategies, etc., and will provide a comprehensive investor due diligence package on each mortgage investment for lenders to review prior to committing an investment.

At Pro Funds Mortgages, our objective is to provide our clients with secure mortgage placements while enabling them to achieve passive cash flow and long-term wealth growth. We offer mortgage investment placements Canada wide, however we do specialize in South Western Ontario. We are able to assist lenders in diversifying their portfolios with multiple mortgage placements to mitigate risk. These mortgage investments will be individually selected by the lender and catered to match preferences with respect to risk appetite, rate of return, length of investment, and property location. Our goal to ensure that you the investor, are comfortable and happy with your investment selection!

If you have savings, equity in your home, a line of credit, or registered funds (RRSP, TFSA, LIRA, RDSP, LRSP, RRIF) available and are looking to generate additional income or grow your current portfolio- while having security on real estate- mortgage investing may be an excellent investment vehicle for you to consider!

Our Mortgage Investments Feature:

investment features

How To Get Started with Mortgage Investing

Mortgage Investing FAQ's

You can download an expanded PDF of these frequently asked questions here.

What Types Of Mortgage Investing Opportunities Are Available At Pro Funds?

At Pro Funds Mortgages, we offer two different types of mortgage investment offerings:

  • i. Individual Lending is a mortgage investment opportunity where an individual is looking for a 1st or 2nd mortgage. These mortgages are usually for residential properties, duplexes, triplexes, or condominiums but also include commercial spaces. The mortgage may be used to consolidate debt, purchase an investment property, fund a renovation, etc.
  • ii. Project Lending is a mortgage investment opportunity that caters to construction and development projects. The size of the mortgage amount requested by the borrower is usually in excess of $1,000,000.
What Is Mortgage Administration?

Administration is when a FSCO (Financial Services Commission of Ontario) approved company will register the mortgage in trust for the lender, or registered funds, and handles the receipt of all payments. Payments are sent to the lender by the administrator through an automatic deposit to the bank account of choice. Mortgage administration is mainly used for syndicated mortgages, however, if you as a lender would like an Individual mortgage administered, there will be an associated fee. The mortgage administrator for Pro Funds is Valour Mortgage Services Inc. in Trust.

What is a syndicated mortgage?

Mortgage Administration is when a FSCO (Financial Services Commission of Ontario) approved company will register the mortgage in trust for the lender, or the group of lenders. Mortgage Administration makes the investment process very passive as the administrator collects all interest payments from the borrower, and then distributes payments to the lender through an automatic deposit into the lender’s bank account of choice. Mortgage administration is mainly used for syndicated mortgages, and is paid for by the borrower. If the borrower does not choose to have the mortgage administered, you as a lender can elect to have your individual invested portion administered with an associated fee applied. The mortgage administrator for Pro Funds is Valour Mortgage Services Inc. in Trust.

What Are The Benefits Of A Syndicated Mortgage?

Syndicated mortgages are an excellent way to diversify your portfolio as you can spread your funds over several projects to mitigate any potential risk. Syndicated mortgages also allow for individuals to invest directly into larger scale opportunities with greater returns that they otherwise might not be capable of funding alone.

What Is The Minimum Investment For Mortgage Investing?

The typical minimum investment is $50,000.00. There are cases however, where lower minimum investments would be accepted as well as cases where higher minimum investments would be required. Please speak with us if you have inquiries regarding a specific project.

What Kind Of Returns Can I Expect?

Anticipated returns for Individual Lending typically range from 7-14% annually, depending on if it is a first or second mortgage. Returns for Project Lending typically range from 10-16% annually.

How Much Should I Invest?

If you would like to get involved in mortgage lending then your first order of business is to establish how much you are comfortable using towards this type of investment vehicle. It is imperative to make sure the funds are liquid in either cash or your registered funds. If you commit to a mortgage, the individual or company borrowing these funds are relying on these funds for a specific closing date. It is also very important to make sure you are not using your life savings for these investments. You can contact Pro Funds Mortgages, and one of our investor relations specialists would be happy to meet with you or have a telephone discussion with you on your specifics.

What Happens When I Find An Investment I Would Like To Proceed With?

When you find an investment offering you are interested in, please notify a member of our team and we will provide you with all details and specifics on the investment. If after reviewing all the relevant materials you decide to proceed, please complete the Investment Reservation form which will accompany the due diligence materials on each specific investment offering. Once your reservation has been accepted, the Pro Funds team would prepare your paper work which would be specifically created for each lender and each mortgage investment. You the lender will then need to sign the documents and provide identification. The documents will then be sent to the legal team representing you under this specific mortgage. The lawyer will proceed with the closing. Please note that we do make our best efforts to close on the dates specified, however, the dates can be delayed based on the lawyers due diligence and timing. Also consider that if you decide to use registered funds, it will usually take an additional 2-3 weeks longer for the plan to release the funds as opposed to a cash investment.

Who Pays The Legal Fees & Other Associated Costs?

It is the borrower’s responsibility to pay for all of the lenders’ legal fees associated with closing the mortgage. The lenders’ lawyer will screen the mortgage, ensure all conditions are fulfilled and ultimately protect the investor’s security before closing the mortgage. When the mortgage is discharged and paid back, the borrower is responsible for paying the discharge fee as well. The borrower is also responsible for paying mortgage broker fees, administration fees and lender fees (as applicable). If you as an investor want to obtain independent legal advice on whether to invest in a mortgage, this would be your responsibility.

What Due Diligence Is Conducted?

Pro Funds will make our very best efforts to deliver all information provided by the borrower to the potential lenders. The protocol for an Individual mortgage versus a Project mortgage will differ. For an Individual mortgage, the request is reviewed by a Pro Funds Mortgages originator. This entails an assessment of credit applications, confirmation of income (if available), and property details (appraisals, income and expenses, leases, insurance, taxes, photos, etc.). This information will be provided to the interested parties for review. If further information is requested by a lender, Pro Funds will make an effort to arrange for all the details requested. Pro Funds will be diligent in assessing each request, but ultimately you are the lender and you will need to make sure you are 100% comfortable with the mortgage investment before proceeding.

The due diligence process for Project mortgages is based on the specific project and its viability, rather than personal credit and income. These mortgages are analysed by very seasoned third party experts, appraisers, environmentalists, engineers, planners, developers, builders and lawyers. Pro Funds Mortgages has aligned ourselves with Valour Capital Group, a development company that offers administration services and Mortgage Investment Offerings (MIO’s). A MIO is a comprehensive package on a specific mortgage investment offering that consists of all of the third party reports and mortgage details. Once again, you are the lender and you must be 100% comfortable with the mortgage investment before proceeding.

What Are The Risks?

The direction of our funds is a key component to return and success. Pro Funds Mortgages is able to mitigate risky investments by directing funds to more reliable sources. We do not typically work with borrowers in distressed circumstances or those who have challenged credit. It is because our direction of mortgage placements is geared to investor specific deals (i.e. Investment property, renovation funds) that we have experienced such low default ratios. Please do keep in mind however, that mortgage investments are not guaranteed by the government and there are no 100% guarantees that you will not lose your investment.

Another factor that mitigates risk in these types of investments is that you as the lender would be registered on the property being pledged as security. This means that you have a registered charge on the real estate. The borrower cannot do anything with this asset without consent from you, the mortgagee. You are not lending to a company that is issuing shares, and you do not own the property, your funds are a mortgage investment that are secured on the real estate. This is beneficial because recovery of your investment will take priority over all unsecured debts, monies owed by the corporation, construction liens and even personal tax arrears.

Finally, when you invest in a mortgage it is very important to understand what your loan to value is. The loan to value represents the total amount of the mortgage as a percentage of the appraised value of the property. It is important to lend to an investment below a 90% loan to value to ensure that there is enough equity in the property to pay the investors back if the property is to be sold. This is your security. Location and property type are other important factors that will be analyzed as a component of our due diligence process. These factors play a large role in mitigating risk.