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Private mortgage is a form of asset-based loan; a secured debt obligation, which produces a regular, predictable income stream to an investor, with all the security, protections and recourse that a mortgage program can provide. Private mortgage insurance allows you buy a home that you won’t be able to buy unless you cannot pay the down payment of 20%. Private mortgage insurance enables you to buy a larger more expensive house without coverage.  The typical interest rate for a direct private mortgage ranges between 9% and 12%, depending upon the time frame, the purpose, the loan-to-value ratio, the exit strategy, the quality of the Borrower’s personal guaranty, the diversity and quality of the leases, if any, and other factors. Private mortgage insurance premiums for a fixed-rate mortgage are often less than the rate for an adjustable loan. Premiums are based on the amount and terms of the mortgage and vary according to loan-to-value ratio, type of loan and the amount of coverage required by the lender.

Unfortunately, some people continue to confuse private mortgage insurance with mortgage life insurance. Private mortgage insurance puts people in homes; mortgage life insurance pays all or a portion of your mortgage in the event of your death.

One advantage of adding private mortgages to an investment portfolio is that the returns they produce tend not to be correlated with those of stocks and bonds. Many registered investment advisors and other financial advisors recognize this and see value in adding a measure of this asset class to help investors avoid volatility. Adding private mortgages to an investment portfolio may make the returns of the overall portfolio less subject to volatility.

Since the lender is the policy owner, the lender chooses the insurance company providing Private mortgage insurance.

At Avon Financial, we can walk you through the process of obtaining a private mortgage.

For more information about private mortgages contact us at:

Ph: 905-216-5563, email: info@avonfinancial.com

 

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