While a self-liquidating loan might cost a little bit more than a mortgage with a balloon or a loan with interest-only payments, in the long run it's the best choice for most situations.Self-liquidating mortgages work by parceling, or amortizing, your money out.If you would like to learn about adding Private mortgages to your RRSP portfolio, be sure to attend my free teleseminar Thursday January the 15th, 2009 at pm eastern.
Investing in private mortgages offers a better rate of return than most other investment opportunities.
Although the private mortgage is used to increase the investment opportunities of the lender, there are times when the lender that holds the mortgage wants to free up some cash before the mortgage matures.
That is the time to consider selling the interest in the mortgage to another investor. The new lender pays you a lump some of money and continues to collect payments at the same interest rate from the borrower.
The great thing about a private mortgage from the investment standpoint is that it provides a regular source of income to the lender (or investor).
The interest rates on private mortgages are typically much higher than traditional loans because the borrowers are often a higher risk (and therefore the mortgage industry is a last resort).
Because of the short term of the mortgages, money does not stayed tied up for very long.