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Private lending and Real Estate Law

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Qadira Jackson of Fleet Street Law speaks to First Fridays on private lending and real estate law.

Qadira Jackson of Fleet Street Law speaks to First Fridays on private lending and real estate law.

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  • 1.  Almost all mortgages originate with a bank or financial institution. In some cases however, a private individual, a seller, or an investor may choose to hold a mortgage directly. This mortgage structure may bring several advantages to buyers, sellers, and third party investors. It is possible for anyone to offer a private mortgage, you dont have to be a bank, or even a real estate professional.
  • 2.  The main reason anyone turns to private lenders is because of bad credit and/or being turned down for a loan with a bank. Private mortgages are often necessary for property zoned for farming, as conventional banks tend not to fund farm land.
  • 3. PROS: HIGHER INTEREST RATES ON INVESTMENT SHORT TERM INVESTMENT MORE LUCRATIVE THAN STOCKS/MUTUAL FUNDS CREATIVE CHOICES/CONTROL OVER YOUR MONEY
  • 4. PROS: OPTION TO SELL THE MORTGAGE TO COMPANIES IF YOU NEED TO EXIT INVEST SECURELY IN REAL ESTATE WITHOUT HASSLE CONTROL OVER LENGTH OF TIME YOUR MONEY WORKS FOR YOU
  • 5. PROS: SECURED- MORTGAGES IS REGISTERED ON THE BORROWERS HOME REMEDIES AVAILABLE (POWER OF SALE/ FORECLOSURE)
  • 6. CONS: RISK THAT PROPERTY VALUE MAY DECLINE BASED ON THE ECONOMY RISK OF DEFAULT – DEALING WITH PEOPLE WHO COULDNT GET CONVENTIONAL FUNDING MAY HAVE TO INITIATE POWER OF SALE MAY BE IN SECOND OR THIR PLACE
  • 7. PROS: NO CREDIT CHECK NO QUESTIONS ABOUT WHAT THE FUNDS ARE FOR QUICK CAN ALLEVIATE HIGH INTEREST DEBT FOR EMERGENCIES (FUNERALS) HOME RENOVATIONS
  • 8. CONS: ANOTHER MONTHLY PAYMENT HIGH INTEREST RATES SHORT TERM- HIGH RENEWAL FEES CAN END UP OWING MORE THAN PROPERTY WORTH REGISTERED ON PROPERTY- MUST BE PAID ON SALE REGARDLESS OF TERM
  • 9. EXAMPLE: YOU HAVE A PROPERTY VALUED AT $100,000.00, AND YOU LEND $70,000.00 FOR A ONE YEAR TERM. LENDER FEE OF $5,000.00 AND INTEREST ONLY AT 15% PER ANNUM, ON A MONTHLY BASIS. YOU WOULD RECEIVE $875 EACH MONTH OF THE YEAR. TOTAL PROFIT OVER THE ONE YEAR TERM = $15,500.00 ($10,500.00 + $5,000)
  • 10.  SEARCH PROPERTY WITH LAND REGISTRY OFFICE TO CHECK FOR REGISTERED MORTGAGES, LIENS. SEARCH BORROWER WITH LAND REGISTRY OFFICE TO ENSURE NO JUDGEMENTS AGAINST HIM/HER GO OVER THE TERMS AND RENEWAL TERMS IN DETAIL WITH THE LENDER & BORROWER. FORWARD BROKER FEES AND LENDER FEES COLLECT POST DATED CHEQUES FROM BORROWER FOR LENDER
  • 11.  REGISTER THE MORTGAGE WITH THE LAND REGISTRY OFFICE TO SECURE IT PROCESS THE FUNDS THROUGH A TRUST ACCOUNT FORWARD THE FUNDS TO BORROWER ARRANGE TITLE INSURANCE TO PROTECT LENDER AGAINST TITLE DEFECTS/FRAUD DISCHARGE (REMOVE MORTGAGE FROM LAND REGISTRY OFFICE AND FORWARD PRINCIPLE TO LENDER
  • 12. IN ASSOCIATION WITHIN FLEET STREET LAW 126-20 CARLTON ST TORONTO, ON M5B 2H5 TEL:416-546-7412WWW.FLEETSTREETLAW.COM

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