Qadira Jackson of Fleet Street Law speaks to First Fridays on private lending and real estate law.

2.  Almost all mortgages originate with a bank
or financial institution. In some cases
however, a private individual, a seller, or an
investor may choose to hold a mortgage
directly. This mortgage structure may bring
several advantages to buyers, sellers, and
third party investors.
 It is possible for anyone to offer a private
mortgage, you don't have to be a bank, or
even a real estate professional.

3.  The main reason anyone turns to private
lenders is because of bad credit and/or
being turned down for a loan with a
bank.
 Private mortgages are often necessary
for property zoned for farming, as
conventional banks tend not to fund
farm land.

4. PROS:
 HIGHER INTEREST RATES ON INVESTMENT
 SHORT TERM INVESTMENT
 MORE LUCRATIVE THAN STOCKS/MUTUAL
FUNDS
 CREATIVE CHOICES/CONTROL OVER
YOUR MONEY

5. PROS:
 OPTION TO SELL THE MORTGAGE TO
COMPANIES IF YOU NEED TO EXIT
 INVEST SECURELY IN REAL ESTATE WITHOUT
HASSLE
 CONTROL OVER LENGTH OF TIME YOUR
MONEY WORKS FOR YOU

6. PROS:
 SECURED- MORTGAGES IS REGISTERED
ON THE BORROWERS HOME
 REMEDIES AVAILABLE (POWER OF SALE/
FORECLOSURE)

7. CONS:
 RISK THAT PROPERTY VALUE MAY DECLINE
BASED ON THE ECONOMY
 RISK OF DEFAULT – DEALING WITH PEOPLE
WHO COULDN'T GET CONVENTIONAL
FUNDING
 MAY HAVE TO INITIATE POWER OF SALE
 MAY BE IN SECOND OR THIR PLACE

8. PROS:
 NO CREDIT CHECK
 NO QUESTIONS ABOUT WHAT THE FUNDS
ARE FOR
 QUICK
 CAN ALLEVIATE HIGH INTEREST DEBT
 FOR EMERGENCIES (FUNERALS)
 HOME RENOVATIONS

9. CONS:
 ANOTHER MONTHLY PAYMENT
 HIGH INTEREST RATES
 SHORT TERM- HIGH RENEWAL FEES
 CAN END UP OWING MORE THAN
PROPERTY WORTH
 REGISTERED ON PROPERTY- MUST BE PAID
ON SALE REGARDLESS OF TERM

10. EXAMPLE:
 YOU HAVE A PROPERTY VALUED AT
$100,000.00, AND YOU LEND $70,000.00
FOR A ONE YEAR TERM. LENDER FEE OF
$5,000.00 AND INTEREST ONLY AT 15% PER
ANNUM, ON A MONTHLY BASIS. YOU
WOULD RECEIVE $875 EACH MONTH OF
THE YEAR. TOTAL PROFIT OVER THE ONE
YEAR TERM =
$15,500.00 ($10,500.00 + $5,000)

11.  SEARCH PROPERTY WITH LAND REGISTRY
OFFICE TO CHECK FOR REGISTERED
MORTGAGES, LIENS.
 SEARCH BORROWER WITH LAND REGISTRY
OFFICE TO ENSURE NO JUDGEMENTS
AGAINST HIM/HER
 GO OVER THE TERMS AND RENEWAL TERMS
IN DETAIL WITH THE LENDER & BORROWER.
 FORWARD BROKER FEES AND LENDER FEES
 COLLECT POST DATED CHEQUES FROM
BORROWER FOR LENDER

12.  REGISTER THE MORTGAGE WITH THE LAND
REGISTRY OFFICE TO SECURE IT
 PROCESS THE FUNDS THROUGH A TRUST
ACCOUNT
 FORWARD THE FUNDS TO BORROWER
 ARRANGE TITLE INSURANCE TO PROTECT
LENDER AGAINST TITLE DEFECTS/FRAUD
 DISCHARGE (REMOVE MORTGAGE FROM
LAND REGISTRY OFFICE AND FORWARD
PRINCIPLE TO LENDER

13. IN ASSOCIATION WITHIN
FLEET STREET LAW
126-20 CARLTON ST
TORONTO, ON M5B 2H5
TEL:416-546-7412
WWW.FLEETSTREETLAW.COM