There is no difference between a mortgage and a home equity loan. When thinking about a mortgage, typically "buying a home" comes to mind. This is the mortgage you get to purchase a property and is typically the "first mortgage" registered on title. A home equity loan is often referred to as as a second mortgage (if the original mortgage has not been paid off) which you can get if there is sufficient equity built up in your property.

Typically, $20,000 would be a minimum requested for a private home equity loan.

When you lend money to a borrower, they will pay you back with a set amount of interest. The principal, or original amount of the loan, is your investment. The return on investment is the interest you recieve on the loan. The final return on investment can be calculated when you total the money you recieved back after the loan has been paid out, including any fees such as prepayment privileges.

Borrowers require private funds when they are in situations where the bank will not be able to finance them. Reasons for bank declines include being off work due to injury or market slowdown, having collections on credit file, and having income or property tax arrears. Regardless of the amount of equity in the property, the bank will not be able to lend outside their guidelines. The idea is to fix the immediate problems for the borrower so that they once again can fit within the bank guidelines. Sometimes you may hear of private funds referred to as "bridge financing" as they are meant to bridge the gap until the borrower can once again qualify with traditional institutions. Once the arrears are paid and the borrower is back to work, their credit score will increase and then more options are available to them. That is typically when the borrower will then have the other institution pay out your private loan. Other scenarios include having an investment mature, sale of another property, or inheritance.

Lending can be done through your personal savings, business accounts, or even registered funds such as RRSP and TFSA to grow your portfolio tax free!

No. EquityApproved.ca is the mortgage brokerage which is arranging the loan and you are the direct lender. We never receive any money from you and you are not investing in our brokerage. When making a mortgage investment, you are directly lending your money to another individual with the security of their real estate backing the loan. The loan, handling/dispursment of funds, and registration of mortgage on title is handled in trust through a real estate lawyer. EquityApproved.ca simply sources and arranges the transaction between the parties invovled.

It is free to be a part of the EquityApproved.ca lending network. We only need to understand your lending criteria and we can start notifying you of lending opportunities with matching criteria.

Since the loan is registered as a mortgage on the property at land titles, the lender is entitled to exercise legal rights to enforce the payment of the loan through the foreclosure process. The courts will determine the redemption period which provides the borrower time to bring the loan, including interest, current. Some of the factors courts will use when determining the length of the redemption period are property value / amount of equity left in the property, ability for the borrower to pay back, and market conditions. Generally speaking, if it is determined the lender is in a safe equity position, typically the redemption period will be longer due to the low risk. If there is not much equity available in the property, the redeption period would be shorter. The lender will pay for legal costs during foreclosure proceedings up front (approximately $2k - $3k), but these costs would be recouped at loan maturity or out of the proceeds from sale of the home if there is sufficient equity.