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Most Canadians
are not familiar with the concept of private mortgages. There
is nothing inherently complicated about private mortgages - they're
just unfamiliar territory for most of us. Private mortgages fill
the gaps that institutional lenders, such as the banks, are unable
or unwilling to fill. They offer an alternative source of financing
to borrowers and a high yield investment opportunity for investors.
Institutional
lenders are usually conservative by nature and like to deal with
mortgage transactions that meet their normal lending criteria.
When a deal is unique or doesn't fit their criteria a private
mortgage can fit the needs of the borrower. Due to the higher
risk, investors can usually generate a greater return on their
investment in a private mortgage transaction. The difficult part
in the whole process is finding a willing investor
to meet the needs of the borrower.
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