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Frequently Asked Questions

Please read through our list of Frequently Asked Questions for Investors or send us a question using the button below.

Investing

  • Can I use my Registered Retirement Savings Plan (RRSP) to fund mortgages?

    Yes! If your needs include redirecting your volatile retirement savings to a steady investment, then consider a Self Directed RRSP mortgage investment. Depending on the amount of risk you desire and the funds you have available in your RRSP, LIRA, or RRIF we will be able to find you a mortgage that meets your comfort level.
  • What is the rate of return associated with this type of investment?

    Mortgage investments can pay anywhere from 6 to 12%.  Your rate of return will be determined on a deal by deal basis.  We will let you know when we have an investment opportunity for you and we will discuss the intricacies of the file in depth.  The more risk associated with the file the higher the interest rate we can charge the borrower, and therefore the more money you will make from the investment.  In saying that, the more equity available in the home the lower the interest rate we must charge to stay competitive and satisfy the borrower to complete the financing through us and therefore the lower the rate of return for your investment. This provides a perfect risk vs. reward balance.
  • What is the process of investing with Magnum as your Mortgage Investment Broker?

    You will need to establish a self directed RRSP through Canadian Western Trust and we will fill out appropriate forms with you to do so.  Your RRSP will be moved to CWT and held in trust by them.  When we receive a mortgage request from a mortgage broker that fits your criteria we will contact you and run through the details of the loan to obtain your consent and approval.  If the mortgage is one you would feel comfortable investing in you will sign an authorization allowing us to fund it with your RRSP and we will then instruct our lawyers.  When the loan is ready to fund, our lawyer will contact CWT and request the funds to be sent in trust from your RRSP to prepare the necessary mortgage on your behalf.  You will then receive monthly interest payments into your RRSP as long as the borrower is making their payments and is in good standing. When the mortgage pays out the remaining principal is transferred back into your RRSP ready to fund another mortgage. You keep the accumulated interest you have been receiving monthly along the way.
  • How long are these mortgage investments for?

    Our mortgage investments are for a 1 year term with the ability for you, as the investor, to offer a renewal at your own discretion if you care to allow the borrower another term. This is usually determined by the borrower’s previous years payment history.
  • What is required from me in regard to the administration of these mortgages?

    When Magnum is the broker of your RRSP investment into a mortgage, if requested we provide the administration of that mortgage.  This allows you to not have to worry about whether the borrower misses a payment.  Magnum’s staff looks after collections calls and gets the mortgage back current as quickly as possible.  If Magnum’s efforts are not successful we will contact you after the 2nd missed payment and discuss the alternative measures with you.  The nice thing about having Magnum administer your mortgage is we do all the work with your lawyer through the foreclosure process.  You can contact us every step of the way for updates and when decisions need to be made we will contact you and allow you to be as involved as you would like to be every step of the way.
  • Is this investment only available through Registered Retirement Savings Plan (RRSP) funds?

    Everything that has been discussed above can also be done through Cash Mortgage Investments.  In this situation if you are a qualified investor you would fund the mortgage directly either via cheque or deposit to the lawyers bank account who would hold your funds in trust and prepare the mortgage in your name.  We would still administer this file on your behalf as stated above and the payment would be direct deposited into your account monthly.
  • Are their any differences between cash and RRSP mortgages?

    The only difference between cash and a registered investment is that the mortgage is in your personal or corporate name when you fund through cash, where as the registered investment is in the name of Canadian Western Trust, the trust company holding the RRSP funds and the mortgage documents on your behalf. In regard to implications of taxation please contact your accountant for any questions in that regard.
  • What are the minimum investment amounts?

    For a 2nd mortgage the minimum investment amount is $25,000.00 to around $150,000.00.  For a 1st mortgage the minimum investment amount normally starts around $200,000.00 up to around $500,000.00.  There really is no maximum for either 1st or 2nd mortgage sizes it is up to the investor’s comfort and what type of mortgage they decide they want.  Every mortgage is different so it is best to be viewed on a case by case basis.

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Risk Mitigation

  • What sort of risks are involved?

    As with any investment with a significant rate of return there is risk involved.  When it comes to mortgages there are a plethora of details our underwriter must look at to qualify the application.  We look at the Loan to Value (the amount of equity left in the home after we fund the transaction), the person’s past credit history through their credit bureaus, their income through their paystubs, letter’s of employment or bank statements, as well as the logic behind the request for funds.  We want to make sure the mortgage broker’s that come to us have a clear exit strategy in 1 to 2 years time to get the borrower back qualified at the banks and the loan paid out.  We also get an appraisal on every file that gives us the current market value of the property along with pictures of its condition.
  • What happens if a borrower stops making their mortgage payment?

    The unique benefit of mortgage investing is the fact your mortgage is secured by an asset. That asset of course being a residential house that is owned and secured to the owned land.  What this means is through the foreclosure process if the borrower does not pay out the mortgage the courts will list the property for sale and your mortgage and any other mortgages that are on title will be paid out on title from the proceeds.  In instances of a first mortgage where the borrower does not pay out your mortgage in time you are even able to take title to the property if you so choose and retain the equity still in tact within the property.  So the main risk associated with this investment will be dependent on the value/condition of the property staying the same and/or appreciating over time.  Even if there is a default in payments and we have to start foreclosure on your behalf as long as there is ample equity still available in the property you will also be paid the interest payments you would be missing over the time the mortgage is in foreclosure.
  • Are there costs with foreclosure that I must come up with upfront?

    Magnum has established an arrangement with our foreclosure lawyer that the majority of their costs are covered upon the payout of the mortgage so you should never be asked for money to cover any of the legal fees associated with the foreclosure upfront.  Magnum covers the disbursement costs on your behalf throughout the foreclosure.  All these associated costs will be covered through equity in the home and if none is available then these costs will come out of the money owed to you in your principal.
  • How do I get started?

    Feel free to give us a call today to set up an appointment to come in and speak with us in regard to mortgage investing, how it works, the risks involved, and any other questions you may have.