Most people, who need a mortgage for their house, get a mortgage from a bank. This type of borrower either approaches a bank that he or she already has a relationship with or shops bank mortgages with the help of a mortgage broker.
There are, however, other types of lenders for mortgages. One type of lender is a private lender.
So, what is a private lender?
A private lender is a person or corporation who lends to someone who may not want or may not qualify for a traditional bank mortgage.
Banks have strict rules about how someone can qualify for a mortgage. Private lenders may be more flexible with who qualifies for one of their mortgages. In addition, these loans may be faster or simpler to obtain.
The borrower pays for this convenience of a private lender with a somewhat higher interest rate than that person could get from a bank. The private lender charges a higher interest rate because he or she is offering a service that the borrower cannot get from a bank and the private lender is often assuming more risk than a bank would.
The big advantage of a private lender for the borrower is flexibility. Sometimes the private lender is a good solution for a short-term “bridge” loan, for example, while a borrower is waiting to sell a property but already wants to purchase another property.
In Canada, there are four types of private lenders. A mortgage investment corporation is the largest and most common type. And that is what we are and do: Metropointe Mortgage Investment Corporation.
The mortgage investment corporation acts as a private lender, and at the same time, allows others to invest in the corporation and benefit from the interest rates charged by the corporation with a rate of return that is typically higher than what an investor could get from a bank.
Metropointe Mortgage Investment Corporation was founded in 2011 and offers the ability to invest in a diversified pool of mortgages secured by real estate in British Columbia. In addition, Metropointe also acts as a private mortgage lender.
If you have questions about our blog or would like to contact us regarding investing or borrowing, please call us in Surrey at (604) 449-1700.