• Okay, so in my last post I talked a little about different ways to build equity, but what’s the best use for equity, which you might have already?

    Well, equity is an asset, one that’s yours to do whatever you want with. Maybe you have outstanding debts, maybe you are thinking about renovating or making your money work for you for a change by purchasing a second investment property or even better by investing your money in second mortgages.

    First thing’s first though. In order to unleash any amount of the equity, which you might have in your home, you will need a licensed mortgage agent (like myself), in order to help you find out how much equity you actually have available. Together, we can then calculate how much of your equity is actually accessible to you. (i.e. how much of that equity you can afford to service if you remove it from your property). Remember at any given time, 20% is unaccessible, therefore the most you can access is 80% of your equity.

    Turning Unleashed Equity Into A Rock Solid Investment Opportunity

    Let’s just take a pause here though. You see, if you are thinking about unleashing some of your home’s equity, you’re likely thinking about re-investing it somewhere else. The most likely scenario in fact, is that you are thinking about investing in some kind of investment property. However, there are other ways to invest equity. Why not for example, look to invest your equity in the same way that banks invest funds which they have available? Namely by investing your equity in second mortgages?

    Confused? Don’t be, it’s actually quite simple. Mortgages are one of the most secured investments available. In fact, banks make a staggering 90% of their business through mortgage investments. Everyone after all, wants to have and keep a roof over their head, and people’s mortgages are the last thing which people default on unless they absolutely have to.

    Okay – But Isn’t Investing In Mortgages Just For The Big Guys?

    Not really. Why? Because banks like easy money! Banks in fact, often steer clear of second mortgages completely. Hence why anyone who actually needs a second mortgage usually has to secure financing from private lending groups in the first place. This however, makes second mortgages one of the most lucrative investment opportunities available to independent investors just like you. In fact, second mortgage investments often generate a return of anywhere between 8-14%, between term times of just 6 to 12 months.

    What’s the drawback? There is not an abundance of opportunities available to lend your funds against residential property borrowers. So what can you do? Lend against development, which is termed as a Syndicated Mortgage. These are groups that work to collectivize investors interested in investing in development projects, with a fixed return of 8% annually. By collectivizing investors, the syndicated mortgage off-sets the risk to any one individual investor, unlike a single family property, which usually only has 1 or 2 private lenders in addition to the primary mortgage holder.

    Worried about the risk? Don’t be. When balanced against repair and maintenance costs of traditional investment opportunities, second mortgage investments often prove much more lucrative. That and it’s no secret that most Canadians prefer to buy than rent property in the first place.

    Really Want To Unleash Your Equity?

    The simple truth is that people looking to unleash and invest the equity in their home often believe that the only way they can do that is with an investment property. However, investment properties don’t always generate anywhere near as consistent financial returns as second mortgage investments, once you factor maintenance, repairs and property management.

    Interested in finding out more? Drop me a line. I’m a licensed mortgage agent who always has my clients’ financial best interests in mind.