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Mortgage-Matters

Be the banker

Have you ever wondered what it would be like to earn the kind of profits reported by the major financial institutions?

One way of getting a piece of this action is to consider being the banker yourself. 

Being the banker refers to you loaning funds by way of mortgages on real estate. This is a great way of passively investing in real estate without being the landlord.

You can use the following funds to invest in real estate as the lender registering on the title of the property.

• Cash

• Registered Retirement Savings (RRSPs) including Locked in Retirement Accounts (LIRAs) and Registered Income Funds (RRIFs) – known as self-directed RRSPs

 - Tax Free Savings Accounts (TFSAs)
 - Unregistered Investments such as stocks, bonds, etc.

• Unsecured lines of credit

• Secured lines of credit on existing real estate owned

There are responsibilities to this, and you must understand the risks and rewards of providing mortgage financing on real estate. Having the right professionals, such as a real estate lawyer and mortgage broker on your team, is very important.

To mitigate your risk, you need to be aware of the possible disadvantages before you start lending. What if you need your cash out, but can’t access it because it is tied up in the real estate to which you are legally bound? The worst-case scenario is that a default occurs that results in the loss of your principle and interest.

On the other hand, there are many advantages. You have the opportunity to diversify your investment portfolio, and you can invest in the real estate market in relatively safety. There is a fixed interest rate with a clear return on your money, and you can often charge an up-front fee as well. Most often, all costs are paid by the borrower as well.

You can use your RRSP, and shelter the profits from tax until withdrawal.

Is being a banker right for you? The answer: The advantages must be greater than the disadvantages for you.

If you have questions about being the banker, give me a call at 250.826.3543 or email [email protected]



More Mortgage Matters articles

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About the Author

April Dunn is the owner and a Mortgage Broker with The Red Door Mortgage Group – Mortgage Architects. She has been assisting clients to purchase, refinance or renew their mortgages for over 20 years.

April has experience as a Credit Union manager, a Residential Mortgage Manager with a large financial institution and as a licensed Mortgage Broker. By specializing in Strategic Mortgage Planning she has the tools available to build a customized mortgage plan, with the features and options that meet your needs.

April provides a full range of residential and commercial mortgage financing options for clients all over the province of British Columbia and across Canada through the Mortgage Architects network.

Contact e-mail address: [email protected] or by phone at: 888-561-2679.

Website:  www.reddoormortgage.com



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The views expressed are strictly those of the author and not necessarily those of Castanet. Castanet does not warrant the contents.

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